Zinc may trade 23.2-127.8 range, gains at 125.80
Commodity Online | May 27 2016
UPDATED 13:21:56 IST

MCX Mentha Oil likely to move in a range of 1259.7-1295.5

MCX Aluminium may trade between 130.5-132.3 levels

MCX Nickel under long liquidation; Support seen at 1091.2

MCX Zinc under fresh selling; Resistance seen at 192.7

MCX Copper under fresh selling; Support seen at 435.2


Zinc on MCX settled up 1.74% at 125.80 as stronger oil and a weaker dollar triggered fund buying, but the rally is expected to fade on a poor outlook for demand growth in top consumer China. Crude oil climbing above $50 a barrel for the first time in nearly seven months had helped boost sentiment in industrial metals markets. And a weaker U.S. currency makes dollar-denominated metals cheaper for non-U.S. firms; a relationship used by funds to generate buy and sell signals from numerical models.

Support also seen after the news, Chinese zinc miners and smelters cranked up output in March after prices rallied, raising questions over the market's bullish scenario by potentially delaying global shortages. Meanwhile US business spending intentions weakened in April for a third straight month amid soft demand for machinery, but a surge in contracts to purchase previously owned homes to a 10-year high supported views economic growth was gaining speed. Also the People's Bank of China will keep policy slightly loose to support the economy, which still faces downward pressure, the China Business News said on Thursday.

Zinc has been the first preference of the base metals market and the best performer this year, with many investors piling in to benefit from a tightening market after shutdowns at a number of major mines.Benchmark zinc is up 16% at $1 870/t this year. The optimism stems from a forecast global deficit after mine closures and production cutbacks led to less supply of semi-processed zinc concentrates. Technically now Zinc is getting support at 124.6 and below same could see a test of 123.2 level, and resistance is now likely to be seen at 126.9, a move above could see prices testing 127.8.

Trading Ideas:
--Zinc trading range for the day is 123.2-127.8.
--Zinc prices gained as supply cuts begin to take effect and inventories of the metal fall to the lowest since 2009.
--China’s zinc concentrate imports hit a 20-month low of 147,000 tonnes in April, down 23.77% month-on-month and 36.82% year-on-year, according to China Customs.
--Chinese zinc miners and smelters cranked up output in March after prices rallied, raising questions over the market's bullish scenario.

Courtesy: Kedia Commodities
 
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