Ways2Capital - Zinc On MCX Settled Up 1.91%

Zinc on MCX settled up 1.91% at 188.95 as LME zinc ended the day 1.4 percent higher at $2,829 a tonne due to deficits arising from mine closures and shutdowns including at Glencore. The widely anticipated zinc mining output reduction materialised and resulted in significantly tighter physical market conditions, particularly for zinc concentrate. 

Confirmation of decreasing supply, in combination with better than anticipated demand conditions driven by the recovery of the Chinese real estate and global automotive market, has resulted in destocking of both zinc concentrates and metal during the year and a higher corresponding LME price. Japan’s Ministry of Finance reported the country’s zinc exports were 4,918,551 kg in January, an increase of 4.5% year-on-year. Combined zinc inventories in Shanghai, Tianjin and Guangdong decreased 1,800 to 298,000 tonnes this past week.

Inventories in Shanghai posted further growth, while those in Tianjin and Guangdong slid. TCs of domestic zinc concentrate (50%) were traded at 3,600-3,800 yuan per tonne (zinc content) this past week, according to data. TCs for imported zinc concentrate (50%) were increasingly quoted at $30 per dry metric tonne (DMT). Increasing number of mines in North China restarted but only slowly. 

Traders said worries persisted about consumption levels in China after the country's housing minister on Thursday suggested moves were afoot to stabilise the property market. Chinese banks extended 2.03 trillion in net new yuan loans in January, the second-highest monthly tally on record and nearly double the December number. 

Technically market is under short covering as market has witnessed drop in open interest by -0.88% to settled at 4144 while prices up 3.55 rupees, now Zinc is getting support at 186.8 and below same could see a test of 184.7 level, And resistance is now likely to be seen at 190.1, a move above could see prices testing 191.3.

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Suhani Verma

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