MCX Zinc under fresh selling; Resistance seen at 192.7
Commodity Online | November 19 2019
UPDATED 09:50:19 IST

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Technically Zinc market is under fresh selling as market has witnessed gain in open interest by 6.57% to settled at 2156 while prices down 0.8 rupees.

Now MCX Zinc is getting support at 190.9 and below same could see a test of 190.1 levels, and resistance is now likely to be seen at 192.7, a move above could see prices testing 193.7.

Zinc on MCX settled down 0.42% at 191.5 as pressure seen  after China's industrial output grew significantly slower than expected in October despite of decline in LME zinc inventories. China’s central bank lowered the interest rate on reverse repurchase agreements by five basis points, the first reduction in the short-term liquidity tool in more than four years.

The People’s Bank of China (PBOC) said on its website that it was lowering the seven-day reverse repo rate to 2.50% from 2.55%. China’s zinc production came in at 548,000 mt, barely changed from a month ago and up 8.3% from a year ago. This was the highest level since January 2018, according to NBS data.

This brought zinc production in January-October to 5.12 million mt, with a year-over-year increase of 9.4%. Social inventories of refined zinc across Shanghai, Tianjin and Guangdong decreased by 200 mt from last Friday November 15 and 5,500 mt from last Monday November 11 to 134,900 mt as of November 18, showed data.

Shanghai contributed to the inventory decline, shrinking 2,200 mt over the weekend, as downstream consumers were keen to restock while arrivals of seaborne materials remained limited. Stocks in Guangdong rose over the weekend, as arrivals increased after the spreads between Guangdong and Shanghai prices narrowed. Downstream consumers in Tianjin, meanwhile, remained cautious about procurement, leading to higher inventories.

Trading Ideas:
--Zinc trading range for the day is 190.1-193.7.
--Zinc prices ended with losses as pressure seen after China's industrial output grew significantly slower than expected in October.
--China’s central bank lowered the interest rate on reverse repurchase agreements by five basis points, the first reduction in the short-term liquidity tool in more than four years.
--China’s zinc production came in at 548,000 mt, barely changed from a month ago and up 8.3% from a year ago.

Courtesy: Kedia Commodities