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: xStation5
