Zinc On MCX Settled Down -1.02%

Zinc on MCX settled down -1.02% at 169.55 as major base metal slid after Moodys downgraded Chinas credit rating and warned that the country’s debt position will worsen as its economic expansion slows, dampened sentiment here. While overall outlook remain firm for Zinc prices as support seen after existing inventories are vanishing at an alarming rate.

On Tuesday, zinc jumped to $2,669, a three-week high following the release of data that showed imports of zinc into China surged in April. Zinc’s rally on Tuesday followed the release of Chinese customs data which showed the country’s imports of refined zinc increased 21% in April to 47,469 tons year-on-year while shipments of ore and concentrates jumped 44%. China is the world’s biggest zinc consumer and there has been some concern that as China’s infrastructure programs wrap up that zinc demand would retreat.

Investors turned bullish on the zinc market in recent months after years of low prices resulted in miners cutting production. So far, the expected supply tightness has been slow to emerge. The global zinc market moved into a deficit of 46,600 tons in March from a surplus of 40,300 tons in February. In the first three months of the year, the market was in a 6,000-ton deficit versus a surplus of 3,000 tons year-over-year.

This; however, was due to an increase in demand. While market participants have been waiting for a big drop in zinc supply, the ILZSG reported that first quarter mine output rose 11% year-over-year. Now technically market is getting support at 168.3 and below same could see a test of 167 level, And resistance is now likely to be seen at 171, a move above could see prices testing 172.4.

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Suhani Verma

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