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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Open account Try 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: xStation5This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
