Zinc price rose more than 2.5% today and is recovering from the recent losses. Is this the beginning of a new trend?
Zinc price rose more than 2.5% and is by far the strongest commodity during today's session, also distinguishing itself from the still strong copper and platinum. What is also important, zinc has already recovered 2/3 of the losses from the January sale-off. What is the strength of zinc?
The whole world is currently undergoing an economic recovery as many governments are pumping funds to the markets. The United States has proposed a $ 1.9 trillion stimulus program, and similar efforts are also taking place in other parts of the world. China, the world's largest manufacturer of products benefits from this approach.
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Create account Try a demo Download mobile app Download mobile appZinc is mainly used in steelmaking and the January sale-off was caused mainly by two factors. First, the major region where galvanized steel is produced has been temporarily shut down due to the coronavirus outbreak. The second thing is the expectation of a production slowdown due to the Lunar New Year celebrations in China (many factories and exchanges in China will be closed by next week).
We are currently seeing a strong buying pressure on metal markets. Zinc inventories, which remained at record highs for much of last year (compared to other commodities) are also declining. The further fate of zinc will depend from the progress of recovery in the industrial sector. As can be seen from nickel prices, the sentiment is very good at the moment. On the other hand, one should be careful - the last few years of February were quite negative for zinc. On the other hand, looking at the seasonality - from mid-March we should observe a rebound.
Zinc resumes its upward movement after a sell- off in January which was caused by the suspension of steel production in China. Nevertheless, when looking at the seasonality, one should remain careful. Source: xStation5The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
