MCX Zinc market under long liquidation; Resistance seen at 149.7
Commodity Online | September 19 2016
UPDATED 12:11:47 IST

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Zinc on MCX settled down -0.27% at 148.4 as prices continued its weakness on profit booking after prices rallied on worries about shortages due to mine closures. Nyrstar hedging its zinc output has fed some doubts about whether the rally can be sustained if producers ramp up output, particularly in China. The global zinc market deficit narrowed to 5,000 tonnes in July from an upwardly revised deficit of 53,000 tonnes in June, data from the International Lead and Zinc Study Group (ILZSG) showed.

China will support asset management companies converting debt into equity stakes for steel and coal firms, and provide credit support to competitive companies with overcapacity issues, its top banking regulator said. Investors assessed a mixed bag of U.S. economic data released throughout the week, ahead of U.S. Federal Reserve policy meeting. The U.S. Commerce Department said the consumer price index rose 0.2% in August, compared to expectations for a 0.1% gain and after a flat reading the previous month. Year-over-year, consumer prices increased 1.1%, above expectations for a gain of 1.0%.Core CPI, which excludes food and energy costs, increased by 0.3% last month, above forecasts for a 0.2% rise and after a 0.1% advance in July.

Zinc has been the second-best LME performer since June 1 and the best performer since the start of the year, jumping 40 percent on concern that the closure of major mines and cutbacks at others would lead to a scramble for supplies. Technically market is under long liquidation as market has witnessed drop in open interest by -6.25% to settled at 6883, now Zinc is getting support at 147.4 and below same could see a test of 146.2 level, and resistance is now likely to be seen at 149.7, a move above could see prices testing 150.8.

Trading Ideas:
--Zinc trading range for the day is 146.2-150.8.
--Zinc prices continued its weakness on profit booking after prices rallied on worries about shortages due to mine closures.
--The global zinc market deficit narrowed to 5,000 tonnes in July from an upwardly revised deficit of 53,000 tonnes in June.
--Nyrstar hedging its zinc output has fed some doubts about whether the rally can be sustained if producers ramp up output.

Courtesy: Kedia Commodities