Zinc on MCX settled up 0.33% at 180 as support seen on short covering after fresh update that a 3-1/2-week strike at Noranda Income Fund's zinc processing facility in Quebec is showing no signs of ending, union officials said on Wednesday, with no talks set between workers and management. The two sides met with a Quebec government-appointed mediator last Friday but no progress was made in settling a dispute over pension cuts and no further meetings arranged, United Steelworkers of America Local 6486 President Manon Castonguay said.
The market is keeping a close eye on the strike as zinc prices have more than doubled since the beginning of last year due to a shortage tied to mine closures and shutdowns. The price of zinc gained 0.6 percent to $2,710 a tonne on Wednesday. Meanwhile Net speculation positioning in LME zinc deteriorated for a third week in a row over February 24-March 3, according to the latest LME COTR. The fact that shorts are re-engaging more fully is a sign that sentiment is reversing negatively.
On the macro front, China’s trade data surprised to the upside in February, with imports in yuan terms up 45% from a year ago, which suggests that domestic demand is picking up. Meanwhile, during its National People’s Congress (NPC) which started on March 5, China cut its economic growth target to “around 6.5%” for 2017 from “6.5%-7%” last year, in line with expectations.
In the physical market, premiums continued to strengthen this week in the USA due to the strike at Noranda Income Fund’s zinc processing facility in Canada, which is tightening available supply. Technically market is getting support at 179.2 and below same could see a test of 178.3 level, And resistance is now likely to be seen at 181.1, a move above could see prices testing 182.1.