Zinc prices on May 26 were near a 24-month low even after rising 2 percent as weak demand for the metal used to galvanise steel pushed the market into surplus and exchange inventories rose.
Prices have plunged almost 34 percent in May 2023 from a high in January as rate hikes, dollar strength and economic recovery in China -- biggest consumer of zinc -- proved weaker than expected.
Three-month zinc was up 2 percent at $2,317 a tonne on May 26 after hitting its lowest since July 2020 on May 25.
Zinc prices in May have remained at around $2,330/ton after touching the 2023 high at $3,550 on January 26. The prices had hit $3,000/tonne in January.
Meanwhile, the Zinc deficit dropped from 1,50,000 tonnes to 45,000 tonnes as China's refined output for the January-April period grew 7.2 percent.
Refined zinc production stood grew by 3.1 percent in 2023 so against contracting 3.8 percent in 2022.
On investment funds net short, Guy Wolf of Marex Spectron London told Moneycontrol, "Once they start unwinding positions or as demand picks up, Zinc can turn $300-500 a ton in a month."
Meanwhile, Zinc inventories in London Metal Exchange-registered warehouses jumped by 11,100 tonnes in Singapore, data published by the exchange showed on May 25, bringing growth over the last two reported days to 64 percent.
These deliveries, signalling that there are surpluses of the metal used to galvanise steel due to weak demand from the construction sector and low prices, pushed the amount of zinc deposited in the LME-registered warehouses to 74,550 tonnes, the highest level in eight months.