Thursday, October 19, 2017 New York : London: India: Tokyo:

 

VIEW ON PRECIOUS METALS [zinc]

 

12-10-11

 

Zinc is expected to remain constrained by the oversupply and high inventory levels in the market, which will limit the scale of further gains in prices.

 

The zinc market remains plagued by oversupply, and expected the market to post surpluses of 150,000 tonnes and 50,000 tonnes over 2011 and 2012 respectively. On the demand side, growth remains constrained by the weakness in the developed economies.

 

Expected global zinc demand growth to slow progressively to 4.9% and 3.9% in 2011 and 2012 respectively. Against this backdrop, producers have been over-eager to restart the production. 

 

Considering the structural surplus and the inventories existing in the market, zinc prices will remain contained over this year. The fall in zinc prices in last 3 months is the result of the concerns about industrial demand growth.

 

The main downside risk comes from larger than expected supplies to the market, combined with deterioration in the global economic outlook, prospect and extent of a slowing Chinese market and the turmoil in US & Europe markets.

 

China accounted for more than 40 percent of the world’s refined zinc consumption in 2010. Decline in China’s industrial output, shrinking Flash Manufacturing Purchasing Managers Index (PMI) numbers of China in September has pushed zinc prices lower than expected levels.

 

 

Technicals:

LME ZINC in Daily, Weekly charts continuously in downtrend from 28th July 11 high of $ 2520 to year’s low of $ 1821 level on Sept 26th and currently trading at $ 1950.

Resistance:$ 2025 is considered as a strong resistance level which is 38.2% fib. retracement level  from 1045 – 2630, above this next resistance is around $ 2250 (23.6% fib. retracement level).

Support:First support is at $ 1840 break below immediate support $ 1650(61.8% fib. retracement level).

Zinc is expected to trade between $ 1840 - $ 2250 in the short term.

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