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Zinc

Global Zinc futures traded bullish in the month of September owing to worries regarding the industrial demand with new lockdowns being imposed in various parts of China. Although the global economy has shown significant recovery with improved economic data in the western countries, but then worries continue to loom over the horizon with various global market events that could delay full recovery of the global markets. Recently China’s top company Evergrande Group witnessed debt crisis which led to a global decline in industrial metals and ore prices. Fundamentally for the month ahead, we expect Global and MCX Zinc futures to trade bullish after the reports of recovering economic data in the Japan and United States. This is expected to increase the demand in the international markets as mining work and refined metal production is expected to rise. Furthermore, supply worries continue to loom in Peru and Mexico with prevailing worries in Chile as well that could further disrupt mining activities. Global Leaders of the developed and developing economies including India are taking efforts in pushing the vaccination process . As per ILZSG, global zinc metal production for June’21 is reported to have risen to 1188.1 thousand tonnes, lower compared to 1144 thousand tonnes of the preceding month. In the case of metal usage of Zinc, it has been reported to be lower at 1208.3 thousand tonnes for June’21, compared with 1167.5 thousand tonnes reported during May’21. The demand continues to still exceed the supplies that could support the prices. We are also forecasting demand to remain strong especially from Europe and United States with expectancy of positive economic reports of the same for the coming weeks.

On the daily chart, after a long bullish rally, MCX Zinc (Oct) future has formed a Bullish Flag Pattern which indicates a continued bullish trend. In addition, the price has taken support of middle Bollinger Band formation & prior demand zone with spurt volume, which confirms a bullish trend in the near future. Moreover, the price has been trading above 50 Exponential Moving Averages, which point out positive trend for near future. Furthermore, the RSI indicator has also sustained above 50 levels which indicates bullish strength. Hence, based on the above technical structure one can initiate a long position in MCX Zinc (Oct) future at CMP 251 or a fall in the price till 250.20 levels can be used as buying opportunity for the upside target of 260. However, the bullish view will be negated if MCX Zinc (Oct) future closes below the support level of 245.50.

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