Zinc prices dip on China regulatory curb, treatment charge jumps 35% on low concentrate demand


Zinc prices eased to Rs 230.10 per kg as participants build a short position as seen by the open interest. The base metal traded in the negative territory in the evening session on fear of China policy action to curb higher inflation.

On the MCX, Zinc delivery for May dropped Rs 1.05, or 0.45 percent, to Rs 230.10 per kg with a business turnover of 1,058 lots. The same for June contract declined Rs 1.15, or 0.49 percent, to Rs 231.80 per kg with a volume of 1,277 lots.

The value of May and June’s contracts traded so far was Rs 576.65 crore and Rs 295.22 crore, respectively.

The US dollar index traded lower at 89.80, down 0.23 percent against major currencies in the evening session.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Base metals prices witnessed decline with most of the metals declined during last week on fear of China policy action to curb higher inflation. China said that it would strengthen its management of commodity supply and demand to curb “unreasonable” increases in prices and prevent them from being passed on to consumers. The ease in US stimulus and warning from China triggered sell-off non-ferrous metals from recent highs.”

“Power curbs in China’s Yunnan province, home to major Zinc smelters, forced smelters to trim production which dented demand for zinc concentrate, in turn, pushing Zinc TC’s higher. The Spot Treatment charges (TC’s) for Zinc in top consumer China which hovered near $ 70 per tonne climbed to $ 95 a tonne last week (assessed by Asian Metal), increasing over 35 percent following low concentrate demand by Chinese smelters”, Yash Sawant, Research Associate, Angel Broking Ltd.


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 48.23 which indicates sideways movement in prices.

At 1355 (GMT), the base metal price slightly dips 0.16 percent at $ 2,964 per tonne in London.

Trading Strategy

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

MCX Zinc has been trading with marginal sideways to positive bias. We may expect the market to rise and fill the gap created during the early hours of the day. The major trend is bearish so the “sell on rise” strategy could be followed.

Geojit Financial Services said, “Present rebounding trades less likely to gather pace unless a solid move above Rs 230 region. Which if remain undisturbed may be a sign of further weakness.”

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