Zinc Dropped As The U.S. Dollar Rose After March Job Growth Beat Expectations

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Zinc Dropped As The U.S. Dollar Rose After March Job Growth Beat Expectations

Zinc prices experienced a slight decline of -0.45%, settling at 232.6, as the strengthened following better-than-expected job growth in March. This bolstered speculation that anticipated interest rate cuts by the US Federal Reserve might be delayed, exerting downward pressure on commodity prices including . In Japan, Toho Zinc Co Ltd announced plans to reduce refined zinc production by 4.3% in the first half of the 2024/25 financial year, reflecting ongoing challenges within the industry. Meanwhile, zinc inventories in both LME and SHFE warehouses continued to climb, leading to a widening discount of the LME cash zinc contract to the three-month contract, reaching levels not seen since November 1991.

In China, a slowdown in infrastructure and property projects due to insufficient capital dampened demand for zinc in the first quarter of 2024. Despite this, refined zinc production in China is expected to increase slightly in March compared to the previous month, driven by extended production days and the recovery of some companies in Sichuan. Data from the International Lead and Zinc Study Group (ILZSG) revealed a shift in the global zinc market from a deficit of 46,800 tons in December to a surplus of 58,700 tons in January.

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Technically, the zinc market witnessed long liquidation, with a drop in open interest by -0.21% while prices declined by -1.05 rupees. Presently, zinc finds support at 231.1, with a potential test of 229.4 levels on the downside. Conversely, resistance is likely at 234.4, and a breakout above this level could lead to further testing at 236

Yes, that’s correct. According to an article on Investing.com published yesterday [2], zinc prices experienced a slight decline due to a stronger US dollar. Here’s a breakdown of the key factors:

Zinc Price Drop: Zinc prices fell by 0.45%, settling at around $232.60 per unit [2].
Reason for Decline: The US dollar strengthened after positive job growth data from March exceeded expectations [2].
Impact on Commodities: A stronger dollar generally makes dollar-denominated commodities like zinc less attractive to overseas investors, putting downward pressure on prices.

The article also mentions a couple of other interesting details:

Reduced Production Forecast: Toho Zinc Co Ltd in Japan announced plans to decrease refined zinc production in the coming financial year, indicating potential supply constraints in the future [2].
Shifting Global Market: Data suggests a shift in the global zinc market from a deficit to a surplus, further contributing to the price decline [2].

Overall, the stronger US dollar due to positive US jobs data seems to be the primary driver behind the recent drop in zinc prices.