PSU stock in focus after receiving ₹46 Cr order for infra project from Karnataka Govt
Zinc prices edged up by 0.11% yesterday, settling at 273.3, driven by optimism surrounding potential demand boosts from China ahead of the Communist Party's third plenum, scheduled from July 15-18. In May 2024, China's refined zinc output increased by 6.26% month-on-month to 536,200 metric tons, indicating robust production despite ongoing market dynamics. However, concerns over supply disruptions emerged as MMG Ltd announced a temporary halt at its Dugald River zinc mine in Australia for maintenance. This decision, amidst an already tight zinc concentrates market, is likely to tighten supply further, potentially supporting prices in the near term. Investors are closely monitoring Beijing's stimulus measures, especially in the property market, to gauge their impact on zinc demand.
While these measures could bolster construction activity, they also raise concerns about exacerbating housing oversupply issues, potentially influencing zinc market dynamics. On the inventory front, zinc stocks in the Shanghai Bonded Zone increased, reflecting waiting imports and market conditions. Similarly, London Metal Exchange (LME) registered warehouse inventories rebounded by 9%, reaching their highest level in nearly three months, signaling surplus metal availability despite recent declines. According to the International Lead and Zinc Study Group (ILZSG), the global zinc market showed a surplus of 22,100 metric tons in April, down from 70,100 tons in March.
Technically, zinc market conditions witnessed short covering as open interest dropped by 3.57%, coupled with a slight price increase of 0.3 rupees. Key support levels for zinc are identified at 271.3, with potential downside testing at 269.1, while resistance is expected at 274.6, with a breakout potentially pushing prices towards 275.7.