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Base Metals Continue To Face Bearish Headwinds

  • Zinc prices saw a sharp rally in early November.
  • Prices have already begun to return back top support and resistance levels.
  • Zinc, in addition to other base metals, face long-term bearish pressure.
Bear

By AG Metal Miner

Like most base metals, the zinc price index rose during the first week of November. However, the 15th marked the last day of zinc’s sharp rally, as prices soon began to cool down and return back to prior support and resistance zones. As with other metal production facilities, Zinc smelters use a lot of energy. And with the growing number of global zinc smelter shutdowns this year, the zinc price index remains volatile.

However, the sharp rally at the beginning of the month didn’t mark a true reversal. In fact, the movement was quite similar to what we witnessed with nickel. Initially, many hoped that China easing zero-COVID would mean more production and smelters opening back up. However, November’s rally proved short-lived, and most base metals still face long-term bearish pressure.

Asia’s Largest Zinc Producer Being Sold?

One of India’s state-run companies, Hindustan Zinc Ltd., could go up for sale, at least partially. That said, it’s uncertain how this could impact the overall zinc price trend. Hindustan Zinc Ltd. is not only Asia’s largest zinc producer but the largest zinc producer in the world. With ownership possibly on the line, buyers are in a state of uncertainty. Zinc market volatility may have been partially because of Hindustan Zinc Ltd. stock prices falling in recent weeks, along with the general global cooldown of zinc.

India is the world’s 4th largest producer of zinc. From an investment standpoint, a change in ownership or stake in HZL could leave Asian-sourced zinc buyers in a bind. With China already shutting down zinc smelters over issues like zero-COVID and energy shortages, zinc faces many long-term bearish obstacles.

What Zinc Buyers Can Expect

When the zinc price index breached short-term lows, they enjoyed a nice bounce. Prices could potentially go higher, which would then confirm a sideways trend for the short term. However, if prices continue to breach support, they will most likely continue their overall downtrend that began when prices broke below $263.50.

By Jimmy Chiguil and Jennifer Kary

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