Zinc Down as the Dollar Turned up for the First Time This Week

  • Commodities Analysis

Zinc yesterday settled down by -0.47% at 232.45 as the dollar turned up for the first time this week as U.S. yields held steady. However, the downside seen limited as zinc treatment charges (TCs) in China jumped to their highest level in more than five months as power shortages in the Yunnan province left smelters facing production cuts, weakening demand for raw material zinc concentrate. Spot TCs, paid by miners to smelters to process imported concentrate into refined zinc in top consumer China, were last assessed at $95 a tonne, up 35.7% from the previous day and the highest since Dec. 4. Charges have previously been languishing a $70 a tonne, the lowest since September 2018 amid tight supply; the 2021 TC benchmark, used in long-term concentrate deals, was agreed at $159 a tonne.
 
The global zinc market surplus narrowed in March to 2,100 tonnes from a revised surplus of 56,900 tonnes the previous month, data from the International Lead and Zinc Study Group (ILZSG) showed. 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.
  
Technically market is under long liquidation as the market has witnessed a drop in open interest by -3.09% to settled at 1723 while prices down -1.1 rupees, now Zinc is getting support at 231.2 and below same could see a test of 229.8 levels, and resistance is now likely to be seen at 234.4, a move above could see prices testing 236.2.
 
Trading Ideas: 
# Zinc trading range for the day is 229.8-236.2.
# Zinc prices dropped as the dollar turned up for the first time this week as U.S. yields held steady.
# However downside seen limited as zinc treatment charges (TCs) in China jumped to their highest level in more than five months
# The global zinc market surplus narrowed in March to 2,100 tonnes from a revised surplus of 56,900 tonnes the previous month

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