Yash Sawant is Research Associate, Angel Broking Ltd.
Zinc, the galvanizing metal, surged over 7 per cent and 5 per cent on the LME and MCX respectively since August’20 as the recovery narrative continues to be the solid expansion in China’s economy and massive liquidity infused by global central banks.
Another supporting element for the industrial metal prices was the plummeting US dollar. The accommodative stance adopted by the US Federal Reserve indicated a low interest environment for a prolonged period, which kept the greenback under pressure, making the industrial metals cheaper for other currency holders.
China: The recovery pillar
Zinc and the other industrial metals continued to post strong gains majorly reflecting the steady growth in China whilst the rest of the world struggled recovering from the pandemic led economic slump.
The revival story of the biggest metal consumer, China, from the pandemic lows was supported by the enormous stimulus infusion primarily focused towards infrastructural development. Expectations of a surge in government’s construction and infrastructure spending boosted the demand outlook for steel as well as zinc (used in galvanizing steel).