Technically Zinc market is under fresh buying as market has witnessed gain in open interest by 12.45% to settled at 12100 while prices up 2 rupees.
Now Zinc is getting support at 215.4 and below same could see a test of 214 levels and resistance is now likely to be seen at 217.5, a move above could see prices testing 218.2.
Zinc on MCX settled up 0.93% at 216.65 gained on fresh buying headed towards its highest in more than a decade amid a supply crunch. Yesterday LME Zinc ended up 1.5 percent at $3,386, near its highest for more than decade hit earlier this week at $3,400.
As per Macquarie Zinc have been flagging Q1 2018 as the quarterly peak for zinc for some time now, on the assumptions that demand destruction and new mine supply finally begin to tackle the yawning deficit. While traders are eyeing on the market as High zinc prices could eventually lead to an irreversible dent in consumption of the metal, specifically in the form of zinc alloys in electric vehicles (EVs).
Substitution out of zinc is likeliest in the alloys sector, estimating that up to 3-5% of metal usage at current levels could be at risk - albeit over a matter of years rather than in the immediate term. Zinc alloys are ideally suited for use in complex car parts such as camera, radar and connector housings.
These parts can be produced quickly and consistently using zinc but are heavier than their aluminium-based counterparts. Meanwhile the dollar fell versus the euro after the European Central Bank signalled it could begin to wind down its 2.5-trillion euro stimulus program this year. A weaker dollar makes dollar-priced metals cheaper for non-U.S. investors.
--Zinc trading range for the day is 214-218.2.
-- Zinc prices ended with gains as support continues amid a supply crunch.
--China's 2018 zinc output seen rising as more smelters come on stream.
--Market is "confused" about post-winter consumption outlook in China but historically low zinc concentrate are set to support prices.
Courtesy: Kedia Commodities