MCX Zinc under short covering; Resistance seen at 165
Commodity Online | July 02 2020
UPDATED 10:20:32 IST

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Technically Zinc market is under short covering as market has witnessed drop in open interest by 3.06% to settled at 1645 while prices up 0.75 rupees.

Now MCX Zinc is getting support at 163.1 and below same could see a test of 162 levels, and resistance is now likely to be seen at 165, a move above could see prices testing 165.8.

Zinc yesterday settled up by 0.46% at 164.25 as better-than-expected manufacturing data from China boosted hopes of an improvement in demand.

Factory activity in China quickened in June, beating expectations. The total new orders index also brightened, but export orders continued to contract and factories cut jobs.

The purchasing managers' index (PMI) for China's manufacturing sector ticked up to 50.9 in June from 50.6 in May, the National Bureau of Statistics (NBS) said. A reading above 50 indicates expansion, while a reading below reflects contraction.

The NBS data also showed that the PMI for China's non-manufacturing sector came in at 54.2 in June, up from 53.6 in May.

Meanwhile, open interest in LME zinc climbed above a total of 240,000 open positions overnight, but remains much lower than levels seen in May, when open interest peaked at 273,449 positions on May 5.Despite a smaller market, LME data shows that zinc continues to be held in tight hands.

China’s refined zinc output fell as expected in May, as fast declines in TCs for domestic zinc concentrate depressed Chinese smelters production enthusiasm and led to output cut or maintenance at smelters in Hunan and Sichuan, showed the latest survey.

Some smelters in Inner Mongolia, Yunnan, Guangxi and Gansu also carried out maintenance as scheduled, and smelters that recovered from maintenance in May were mostly located in Yunnan, Qinghai and Hunan.

Trading Ideas:
--Zinc trading range for the day is 162-165.8.
--Zinc prices gained as better-than-expected manufacturing data from China boosted hopes of an improvement in demand.
--Factory activity in China quickened in June, beating expectations.
--The global zinc market surplus declined to 10,800 tonnes in April from a revised surplus of 29,700 tonnes in March.

Courtesy: Kedia Commodities

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