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Tuesday, May 17, 2022

MCX Zinc under short covering; Resistance seen at 255.4

Technically Zinc market is under short covering as market has witnessed drop in open interest by 6.9% to settled at 1188 while prices up 1 rupees.

Now MCX Zinc is getting support at 250.5 and below same could see a test of 247.8 levels, and resistance is now likely to be seen at 255.4, a move above could see prices testing 257.6.

Zinc yesterday settled up by 0.4% at 253.1 as total zinc inventories across seven Chinese markets stood at 119,800 mt as of September 30, down 11,500 mt from September 27 and 9,400 mt from September 24.

The inventory in Shanghai declined sharply amid increasing pre-holiday restocking by downstream plants. Guangdong saw a decrease in stocks as maintenance at smelters affected the shipments and downstream producers still have pre-holiday restocking demand.

The inventory in Tianjin trended lower due to limited arrivals of cargoes and pre-holiday stockpiling. Inventories in Shanghai, Guangdong and Tianjin fell 9,600 mt, and inventories across seven Chinese markets decreased 9,400 mt.

The situation in top metals consumer China was also worrying, with factory activity showing a contraction for the first time since February last year at the same time as a looming debt crisis has hit property giant China Evergrande Group.

The global zinc market deficit narrowed to 6,600 tonnes in July from a revised deficit of 40,000 tonnes in June, data from the International Lead and Zinc Study Group (ILZSG) showed.

Japan’s industrial output fell for the second straight month in August as COVID-19 outbreaks elsewhere in Asia disrupted supply chains for carmakers already facing headwinds from a prolonged chip shortage.

Trading Ideas:
–Zinc trading range for the day is 247.8-257.6.
–Zinc prices remained supported as total zinc inventories across seven Chinese markets stood at 119,800 mt, down 11,500 mt.
–Inventories in Shanghai, Guangdong and Tianjin fell 9,600 mt, and inventories across seven Chinese markets decreased 9,400 mt.
–The situation in China was also worrying, with factory activity showing a contraction for the first time since February.

Courtesy: Kedia Commodities

Source: Comodity Online

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