Zinc Settled Flat Paring Its Gains As Pressure

Zinc settled flat paring its gains as pressure seen as after update China zinc output rose in June. China’s refined zinc output jumped 8.8% on-month to 457,000 tonnes in June, but declined 0.8% on a yearly basis. China’s refined zinc output in the first six months of the year was 2.59 million tonnes, a drop of 2.52% on a yearly basis. An ore shortage will see the global refined zinc deficit gradually widen over the next few years, with producers to curb output, research firm BMI said.

It noted that zinc production and consumption growth are expected to average 1.9% and 1.7% respectively between this year and 2021, while the global stocks-to-use ration will narrow considerably from 9.2% this year, to 1.8% in 2021. Zinc refiners, particularly those in China, will scramble to secure zinc concentrate over the coming quarters on the back of production curtailments implemented in 2016 and two key mines coming offline permanently.

Zinc inventories in both Shanghai and Tianjin fell, while those in Guangdong added. Supplies in Guangdong were steady. Downstream buyers lacked buying interest since they had built some stocks previously. Inventories fell in Tianjin because of fewer arriving shipments from Zijin Mining. Besides, production at galvanizers recovered after environmental protection inspections in north China. Downstream producers purchased as needed.

Arriving shipments of imported zinc decreased in Shanghai due to unfavorable SMM/LME zinc price ratio. Technically market is under long liquidation as market has witnessed drop in open interest by -1.65% to settled at 8187 while prices down -0.15 rupees, now Zinc is getting support at 179.2 and below same could see a test of 178 level, And resistance is now likely to be seen at 181.6, a move above could see prices testing 182.8.

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Suhani Verma

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