Amid Ongoing Worries about the Global Economy’s Growth, Zinc Prices Experienced a Decline

Zinc prices fell to a three-week low, owing to an increase in stocks and a rise in the dollar, as metals demand in China remained subdued despite the world's top metals consumer abandoning covid-19 limits.

By 1700 GMT, three-month zinc on the London Metal Exchange (LME) had fallen 4.8% to USD 3,219 per tonne, the lowest since January 12. This year, zinc has gained roughly 8%.

Zinc prices fell further after US job growth rose substantially in January, sending the dollar index soaring.

A stronger dollar raises the cost of commodities priced in US dollars for buyers using foreign currencies.

Zinc stocks on the London Metal Exchange have fallen to their lowest levels since 1989, while they have risen in China.

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Inventories at Shanghai Futures Exchange-registered warehouses have more than doubled to 91,616 tonnes since Jan. 20, according to the first such report since China's Lunar New Year break.

According to Edward Gardner, commodities analyst at Capital Economics, this is evidence that metals demand in China will take time to increase.

According to market experts, metals prices will struggle to achieve increases this quarter (and) may even decline somewhat before beginning a more sustained upturn towards the middle of the year.

Zinc production is utilised in many consumer items, not only steel, and with advanced economies entering or flirting with a recession in the first half, demand will be poor early this year.

Despite concerns that interruptions in major copper-producing countries in Latin America and Africa will constrain supply, LME copper fell 1% to USD 9,039 per tonne, the lowest since January 11.

However, a predicted stoppage in output at Peru's massive Las Bambas copper mine has not caused too much alarm among Chinese smelters.

The news has sent treatment charges offers lower, but trading has been very thin because many smelters are sitting on adequate stocks and are not concerned about their first-quarter supply," a Chinese smelter source said.

Smelters charge miners treatment fees to turn concentrates into refined metal. LME aluminium was down 1.7% to USD 2,573 a tonne, nickel fell 4% to USD 28,600, tin fell 3.8% to USD 28,255, and lead fell 1.3% to USD 2,106.

Zinc: Price Trend and Forecast

North America

The zinc market has recently expanded due to persistent demand from end-user industries in the United States. Initially, imports were prohibited due to China's Golden Week holiday. According to market experts, continued supply disruptions, excessive inflation, and China's zero-COVID policy all had a role in raising overall recession fears and decreasing hopes of recovery in the United States throughout the time frame.

Zinc prices climbed as China relaxed a few of its COVID requirements, raising hopes for a demand rebound later in the quarter. Furthermore, Wall Street saw a rise as risk assets increased and inflation in the US slowed due to softening Chinese constraints.

However, when the economy improved and the ports saw a major reduction in ship backlogs following the protracted port backlog, the US supply chain improved steadily in the end.

APAC

In recent months, the regional zinc market in China has shown an upward trend. Because of the shutdown of industrial facilities during the Golden Week, China's zinc export orders have gradually decreased.

The overall pricing trend was mostly related to the end-user industry's consistent demand. Because they have sufficient stock, area producers and suppliers may meet the full regional demand.

Metal prices, particularly zinc, rose after China lifted a few of its COVID laws, raising prospects of a revival in the world's second-largest economy.

Europe

In recent months, the European zinc market has continued to rise. Though rising energy and raw material costs made it more difficult for the pharmaceutical and nutraceutical businesses to plan, demand remained favourable.

Despite rising energy prices and supply-chain constraints, industrial production in Germany increased modestly.

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However, COVID-related issues, as well as the ongoing problems in Russia and Ukraine, all had a negative influence on the output.

As per Procurement Resource, zinc prices fell to a three-week low as stockpiles increased and the currency rose, as metals demand in China remained weak despite the world's largest metals user eliminating covid-19 limitations. Three-month zinc on the London Metal Exchange (LME) has dropped 4.8% to USD 3,219 per tonne by 1700 GMT, the lowest since January 12.

Zinc has gained almost 8% this year. Zinc prices fell even further as US employment growth increased significantly in January, sending the dollar index skyrocketing. A stronger dollar enhances the cost of items priced in US dollars for foreign currency buyers.