Zinc On MCX Settled Up 0.27%

Zinc on MCX settled up 0.27% at 170.25 on fresh buying as prices gaining support from falling stocks in LME-approved warehouses, with inventories down about 20 percent this year at 342,675 tonnes. These are levels last seen in 2009. Prices have risen by more than 40 percent over the past year as mine closures and suspensions have fuelled concerns over potential shortages. Last week, zinc prices fell to an intraday six-month low, despite another projected deficit this year. The metal ended the week on a stronger note.

However, the fact that zinc has fallen in price despite strong fundamentals signals trouble in the industrial metal complex. Support also seen after dollar slipped to a more than six-month low on Monday, weighed down by an uncertain U.S. political climate, while oil prices rose on expectations that crude output cuts would continue and the euro surged. Zinc prices at SFEX surged more than 5 percent before paring gains to 22,195 yuan, still up 4.2 percent.

LME zinc also cut gains to half a percent at $2,631.50, having earlier struck its highest in two weeks at $2,667, the most expensive since May 2. Shanghai zinc surged on Monday on the back of a sustained crackdown in China's polluting steel industry, which fuelled worries about supply of the construction material and lifted prices of its raw materials.

Metals were jolted out of a downtrend that last week saw them touch their lowest for the year amid concerns about a slowdown in China's metals demand. Now technically market is under fresh buying and getting support at 169.4 and below same could see a test of 168.4 level, And resistance is now likely to be seen at 171, a move above could see prices testing 171.6.

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Suhani Verma

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