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Zinc prices plummeted from near yearly highs on perking US dollar on Fed’s hawkish signals, and on China’s plans to release industrial metals from national reserves to curb inflation pressure.

Global Economy.

The Federal Open Market Committee (FOMC) maintained the rates at 0-0.25% level signalling a hike in 2023. The committee also opened talks on pulling back the monthly bond purchases.

Fed’s hawkish signals in the recent policy meeting dampened sentiments in the risky asset classes.

Most of the global equity gauges gave up some gains during last week.

China’s Industrial production in increased 8.8 percent YoY in May of 2021, the lowest rate in 5 months.

Currencies

U.S. Dollar index gained to nine week high last week, and settled above 92 mark against the basket of currencies.

Euro slipped lower by 2.03 percent against dollar last week. Chinese Yuan shed 0.86 percent, while Japanese Yen slipped 0.49 against greenback.

Indian Rupee shed more than 1.00 percent and rested at 74.1 last week.

Zinc

* LME Zinc plunged 7.29 percent last week. SHFE Zinc fell 1.97 percent.

* In MCX, Zinc near month futures slipped 4.85 percent last week.

* The zinc inventory levels declined LME and SHFE warehouses

* Cash over three month forward futures premium on LME Zinc is contango at $13.90 per MT.

Zinc prices plummeted from near 2-year highs

The zinc prices in major global platforms nosedived last week from the vicinity of two year highs. A sharp rebound in US dollar owing to US Federal Reserve's hawkish signals pressured the base metals. Additionally, Chinese governments plan to curb rising commodity prices boosted selling pressure.

The fastest pace growth in China’s factory gate prices in over 12 years due to surging commodity prices, highlighting global inflation pressures induced China’s government to take adequate measures to maintain market order. subsequently, in addition to a close monitoring of market activities, the Chinese authorities also announced plans to release industrial metals from its national reserves to curb rising prices.

LME Zinc futures plunged 7.29 percent last week to USD2822.5 per metric last week. China’s SHFE Zinc prices plunged a second straight week. In the last week, shanghai zinc prices shed 1.97 percent and closed at CNY 22105 per metric tonne. In MCX platform, Zinc near month futures prices dipped 4.85 percent last week and closed at Rs. 230.30 per kilogram.

Global Zinc market surplus narrows in March to 2,100 T -ILZSG

The data from the International Lead and Zinc Study Group (ILZSG) showed that the global zinc market surplus narrowed in March to 2,100 tonnes from a revised surplus of 56,900 tonnes the previous month. Previously, the ILZSG had reported a surplus of 65,400 tonnes in February. During the first three months of 2021, the ILZSG data showed a surplus of 54,000 tonnes, down from a surplus of 249,000 tonnes in the same period of 2020. Around 13.5 million tonnes of zinc are produced and consumed each year.

Warehouse stock level

The Zinc inventory levels in LME registered warehouses decreased 2.36 percent and totalled 261325 MT. The inventory level in China’s SHFE registered warehouses depleted as well by 10.90 percent last week and totalled 50417 MT.

Outlook :

Chinese’s Government's plant to curb rising commodity prices and a sharp rise in dollar index likely to weigh the sentiments. Meanwhile, hopes of a demand recovery in emerging countries may limit major selloffs in the counter.

LME:

If the support of $2740 remains hold, there are chances of recovery upticks. Anyhow major rallies are seen only a close above $3100.

MCX:

Further rallies seen only a break of 248. Else, there are chances of choppy with mild negative bias in the immediate run.

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