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Zinc prices plunge 2.76% on MCX; outlook remains bullish

Zinc prices plunge 2.76% on MCX; outlook remains bullish
May 16
00:58 2021

Zinc prices tumbled 2.76 percent to settle at Rs 230.50 per kg this week as participants trimmed their long position as seen by the open interest. The base metal fell in three out of five sessions on the MCX after a gap down open to trade at day’s low.

On the MCX, Zinc delivery for May gained Rs 0.85, or 0.37 percent, to end at Rs 230.50 per kg with a business turnover of 1,741 lots. The same for June contract jumped Rs 0.90, or 0.39 percent, to Rs 231.90 per kg with a volume of 373 lots.

The value of May and July’s contracts traded on Friday was Rs 1,058.14 crore and Rs 40.81 crore, respectively.

According to the International Lead and Zinc Study Group (ILZSG), the global zinc metal production for February 21 has fallen to 1,149.1 thousand tonnes, lower compared to 1,181.2 tonnes in the preceding month. Zinc usage has been reported to be lower at 1,083.7 thousand tonnes for February 21 compared with 1,162.9 thousand tonnes reported during January 21.

The US dollar index closed lower at 90.28, down 0.49 percent on May 14 against a basket of six rival currencies. The dollar index ended with a gain of 0.07 percent during the week.

“Fundamentally for the month ahead, we expect global and MCX Zinc futures to trade bullish after reports of recovering economic data in the Asian markets and the United States. This is expected to increase the demand in the international markets as mining work and refined metal production is expected to rise,” said Sunand Subramaniam, Senior Research Associate, Choice Broking.

Although earlier months have forecasted a decline in production with the decline in demand/usage of metals and ores, we are forecasting demand to remain strong especially in China and other Asian countries with positive economic reports in the US, Subramaniam added.

Technicals

The non-ferrous metal has been trading higher than 50, 100 and 200 days’ moving averages but lower than 5 and 20 days’ moving on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 49.37 which indicates neutral movement in prices.

The base metal price settled with a gain of 0.89 percent at $ 2,940 per tonne in London.

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