Technically Zinc market is under long liquidation as market has witnessed drop in open interest by 4.49% to settled at 1276 while prices down 4.65 rupees.
Now MCX Zinc is getting support at 249.1 and below same could see a test of 245.9 levels, and resistance is now likely to be seen at 256, a move above could see prices testing 259.7.
Zinc yesterday settled down by 1.81% at 252.1 as factory activity in top metals consumer China shrank unexpectedly in September as high raw material prices and power cuts pressured manufacturers in the world’s second-largest economy.
On the fundamentals, domestic zinc inventory continued to fall, which 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. 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.
Separate data showed retail sales in August slipped for the first time in six months as households cut spending amid a coronavirus relapse, signalling lacklustre consumer sentiment. 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.
Trading Ideas:
–Zinc trading range for the day is 245.9-259.7.
–Zinc prices dropped as factory activity in top metals consumer China shrank unexpectedly in September.
–Domestic zinc inventory continued to fall, which stood at 119,800 mt as of September 30, down 11,500 mt from September 27.
–Japan’s factory output extends declines on car production cuts.
Courtesy: Kedia Commodities
Source: Comodity Online
