MCX Zinc under long liquidation; Resistance seen at 188.4
Commodity Online | September 12 2019
UPDATED 09:50:46 IST

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Technically Zinc market is under long liquidation as market has witnessed drop in open interest by 7.04% to settled at 2560 while prices down 1.05 rupees.

Now MCX Zinc is getting support at 185.3 and below same could see a test of 184.1 levels, and resistance is now likely to be seen at 188.4, a move above could see prices testing 190.3.

Zinc on MCX settled down 0.56% at 186.4 on profit booking after prices gained earlier as consumption recovers after the seasonal lull and China took more measures to boost the economy and improve liquidity.

The producer price index (PPI), a key barometer of corporate profitability, dropped 0.8% from a year earlier in August, the National Bureau of Statistics (NBS) said. It was the worst year-on-year contraction since August 2016, when it fell 0.8%.

NBS data also showed that China's consumer price index (CPI), a main gauge of inflation, rose 2.8% year on year in August, unchanged from that in July.  China's refined zinc and zinc alloy output grew by 1.4% in August from the previous month, as a recovery in smelter operating rates offset seasonal summer maintenance.

The country churned out 436,000 tonnes of zinc last month, which was also up 23.7% year-on-year, according to a survey of 48 smelters by Antaike. Higher operating rates in the Henan, Shaanxi, Yunnan and Gansu provinces made up for declines in Hunan and Qinghai, as well as ongoing maintenance at two smelters in Inner Mongolia.

Production is set to rise further in September now that maintenance season has passed, said Antaike, which puts China's January-August zinc output at 3.23 million tonnes, up 7.9% year-on-year. Social inventories of refined zinc across Shanghai, Tianjin and Guangdong extended their gains over the weekend, rising 900 mt from Friday September 6 to 145,400 mt as of Monday September 9.

Trading Ideas:
--Zinc trading range for the day is 184.1-190.3.
--Zinc dropped on profit booking after prices gained earlier as consumption recovers after the seasonal lull and China took more measures to boost the economy.
--China's refined zinc and zinc alloy output grew by 1.4% in August from the previous month, as a recovery in smelter operating rates offset seasonal summer maintenance.
--Social inventories of refined zinc across Shanghai, Tianjin and Guangdong extended their gains over the weekend, rising 900 mt.

Courtesy: Kedia Commodities

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