Zinc On MCX Settled Down -1.36%

Zinc on MCX settled down -1.36% at 162.9 pressured by weaker iron ore and oil prices plus concern about demand in top consumer China. Zinc prices were also knocked by a jump in available inventories, showing that supplies were adequate despite the closure of major mines last year.

Both zinc and nickel are used in the steel industry so are sensitive to iron ore and steel prices while oil is a key input in mine production. On-warrant LME inventories - those not earmarked for delivery and therefore available to investors - climbed by 11 percent to 179,325 tonnes.

Base metals demand in China, the top consumer of industrial metals, is expected to taper off in the second half of the year. TCs of domestic zinc concentrate rose in some South China regions this past week. TCs in Yunnan, Guangxi and Hunan were hiked by 100-200 yuan per tonne (zinc content). Some local smelters attempted to raise TCs by 300-400 yuan per tonne (zinc content). But deals were limited at such levels.

Spot premiums inverted to discounts over SHFE front-month zinc this past week. Influx of imported zinc added to supplies. Total inventories in China’s major markets, including Shanghai, Guangdong and Tianjin increased 1,500 tonnes. Total inventories in Shanghai, Guangdong and Tianjin increased 1,500 tonnes this past week to 130,550 tonnes this past week.

Zinc inventories in Guangdong decreased slightly, while those in Shanghai and Tianjin reported a small growth. Technically market is under fresh selling as market has witnessed gain in open interest by 3.29% to settled at 4400 while prices down -2.25 rupees, now Zinc is getting support at 161.3 and below same could see a test of 159.7 level, And resistance is now likely to be seen at 165.2, a move above could see prices testing 167.5.

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Suhani Verma

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