MCX Zinc under pressuer after release of ILZSG report

MCX Zinc traded bearish on Monday, market registered days low near 79.65, closed at 8035 with loss of 1% from previous closing. Intra day high registered near 82.

LME zinc have come under pressure after figures released by the International Lead and Zinc Study Group show a market surplus for zinc and a smaller deficit than the year before for lead, a London broker says. Momentum sellers have jumped on the bandwagon, adding pressure to LME lead.
The global zinc market was in surplus by 78 000 t during the first four months of this year, compared with an oversupply of 43 000 t during the same period of 2007, according to estimates from the International Lead and Zinc Study Group (ILZSG).

Mine output, which increased 9,2% year on year, to 3,8-million tons, was driven primarily by increases in Australia, Bolivia, China, Kazakhstan, Mexico, Peru and the US, the group said.

Lower refined zinc metal output in Finland, France, Mexico and Namibia was more than balanced by increases in India, Italy, Japan, the Republic of Korea, the Netherlands, Peru and the US, resulting in a rise in global production of 1,5%, to 3,76-million tons for the four months.

However, despite a sharp reduction in European demand of 7,5%, and falls in Japan and the Republic of Korea, global usage of refined zinc metal increased by 0,6%, mainly thanks to growth in demand from China.

China was a net importer of refined zinc metal over the first four months of 2008, with imports of 4 000 t, compared with net exports of 119 000 t over the first four months of 2007.

Prices for zinc, which is used to galvanise steel, have fallen 20% this year, as production levels outpace demand.

Zinc inventories at LME, decreased by 300 MT to 143975 MT.

MCX Zinc June - Technical Outlook:

The daily stochastics have crossed over down which is a bearish indication. The prices closed below short term and medium term EMA, which supports bears. MACD is heading downwards in positive region, showing decrease in bullish momentum.
Technical are neutral to bearish signalling sideways to lower prices in the near term. Initial support for the market is around 79.3 levels. If broken can see further fall to 78.3 and 77.0, If market holds above 80.7 further rally can be seen towards 81.7 and 83.0


Recommendations- MCX Zinc June: Sell at 81 Target 79.50 and 78 SL 82.20

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