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Tuesday, March 19, 2024

MCX Zinc under short covering; Resistance seen at 306.8

Technically Zinc market is under short covering as market has witnessed drop in open interest by 30.91% to settled at 818 while prices up 5.45 rupees.

Now MCX Zinc is getting support at 294.4 and below same could see a test of 286.7 levels, and resistance is now likely to be seen at 306.8, a move above could see prices testing 311.5.

Zinc yesterday settled up by 1.84% at 302.05 as investors fretted over supply shortage amid production cuts due to electricity price hikes in Europe.

China’s economy grew by 4.9% in the third quarter, its slowest pace in a year, hurt by power shortages, supply chain bottlenecks and troubles in the property market.

Belgium-based Nyrstar said last week it would cut production by up to 50% at its three European zinc smelters and Glencore , which also has three zinc smelters in Europe, said it was “adjusting production” to save energy costs.

Still, sky-high power prices are also lowering demand at metals-manufacturing companies and the Chinese state reserve bureau released 180,000 tonnes of zinc so far this year to contain prices.

The global zinc surplus is likely to shrink to 44kt in 2022 from 217kt this year, according to the International Lead and Zinc Study Group. Global zinc consumption growth is estimated at 6.2% in 2021 before easing to 2.3% next year.

The overseas production reduction amid rising electricity and carbon emission costs has been intensifying. Though Glencore announced that it will only apply staggered production, the market still heated up as it takes up a large amount of the total production.

Trading Ideas:
–Zinc trading range for the day is 286.7-311.5.
–Zinc gains as investors fretted over supply shortage amid production cuts due to electricity price hikes in Europe.
–Belgium-based Nyrstar said it would cut production by up to 50% at its three European zinc smelters and Glencore.
–China’s economy grew by 4.9% in the third quarter, its slowest pace in a year.

Courtesy: Kedia Commodities

Source: Comodity Online

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