NewsMarketsZinc Prices Rise on MCX Despite Global Market Decline, Supply Shortages Drive MomentumZinc Prices Rise on MCX Despite Global Market Decline, Supply Shortages Drive Momentum
Zinc futures on MCX gained 0.27% to Rs 294.00 per kg, contrasting declines in LME and SHFE markets. The price increase is attributed to sharp declines in global zinc inventories, with LME stocks down over 60% this year. Technical analysis indicates a strong uptrend near Rs 293.00, with support at Rs 282.00-284.00 and resistance at Rs 298.00-300.00. A trading strategy suggests long positions around Rs 288.00-290.00 with a stop loss below Rs 282.00 and targets at Rs 299.00 and Rs 310.00.
*this image is generated using AI for illustrative purposes only.
Zinc futures on the Multi Commodity Exchange (MCX) showed resilience amidst global market headwinds, registering a 0.27% gain to reach Rs 294.00 per kg. This uptick stands in contrast to the downward trend observed in international markets, where London Metal Exchange (LME) three-month contracts and Shanghai Futures Exchange (SHFE) prices experienced notable declines.
Global Market Dynamics
The divergence in zinc price movements across different exchanges presents an intriguing market scenario:
| Exchange | Price Change | Current Price |
|---|---|---|
| MCX | +0.27% | Rs 294.00/kg |
| LME | -1.00% | $3,007.00/mt |
| SHFE | -2.60% | 21,140.00 CNY/mt |
Supply Shortages Fuel Price Increase
The primary driver behind the price increase on MCX appears to be the sharp decline in global zinc inventories. LME stocks have plummeted by over 60% this year, signaling significant supply shortages in the market. While mined zinc production has seen an uptick, ongoing refining bottlenecks continue to constrain the supply of refined metal, creating upward pressure on prices.
Technical Analysis
Technical indicators suggest a strong uptrend for MCX zinc near the Rs 293.00 level, with the metal having surpassed key moving averages. However, momentum indicators hint at overbought conditions, suggesting caution for traders and investors.
Key levels to watch:
- Support: Rs 282.00-284.00
- Resistance: Rs 298.00-300.00
Trading Strategy
For those considering trading zinc futures on MCX, the current market analysis suggests the following strategy:
- Entry: Consider long positions around Rs 288.00-290.00
- Stop Loss: Place below Rs 282.00
- Targets: Rs 299.00 and Rs 310.00
It's important to note that commodity trading carries inherent risks, and traders should always employ proper risk management techniques.
Market Outlook
The contrasting price movements between domestic and international zinc markets highlight the complex interplay of global supply dynamics and local demand factors. As refining bottlenecks persist, market participants will be closely monitoring inventory levels and production data for cues on future price trends.
Investors and traders in the zinc market should remain vigilant of both technical indicators and fundamental supply-demand factors as they navigate this volatile commodity landscape.
19
