Zinc On MCX Settled Up 1.66%

Zinc on MCX settled up 1.66% at 165 gained on short-covering as support seen from LME Zinc prices which have touched a two-week high as expectations of stronger demand from steelmakers rose and inventories of the metal on the London Metal Exchange hit nine-year lows. Benchmark zinc on the LME ended 1.2 per cent higher at $US2,556 a tonne. It briefly touched $US2,568 per tonne, a high last seen on June 2.

While the market focus is on New Orleans warehouses' on-warrant stocks, which have dropped to 144,975 tonnes after a further 24,475 tonnes of cancellations or metal earmarked for delivery. On-warrant zinc stocks - metal available to the market - have fallen 54 per cent this year to the lowest levels since July 2008. In April, China's refined zinc output fell to its lowest in more than two years due to mine closures.

Imports increased 21 per cent in April to 47,469 tonnes year-on-year. Also China's securities regulator said it will encourage wealth management firms to invest in commodity futures in a bid to promote its domestic derivatives industry and raise the amount of commodities in the country's assets under management.

China's central bank plans to step up support for "green" financing, including incentives to encourage banks to extend more loans for projects friendly to the environment, a deputy governor said on Friday. Technically market is getting support at 163.4 and below same could see a test of 161.8 level, And resistance is now likely to be seen at 165.9, a move above could see prices testing 166.8.

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Suhani Verma

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