Zinc up 6.7% on Chinese buying
economictimes.indiatimes.com
29 Mar 2009, 0212 hrs IST, Nidhi Sharma, ET Bureau
MUMBAI: Zinc, which is primarily used in steel industry, moved up by 6.7% this week compared to previous week following a significant jump in Chinese buying. Zinc along with other metals was also supported by the positive data from the US on new home sales and consumer confidence.
For the coming week, analysts expect the metal to move up further due to good demand though there may be some profit booking with dollar gaining strength. Kunal Shah from Nirmal Bang Commodities says that due to production cuts and Chinese buying zinc may move into deficit from surplus of 59,000 tonnes. “MCX April contract, which is at Rs 68 per kg levels, may touch Rs 71 in coming week,” he added.
Even Reena Walia, base metals analyst at Angel Commodities, feels that the prices may rise in the coming week but if there are some negative triggers from the data expected in coming week the upside can be capped. “There is the monthly consumer confidence data on March 31, and that is expected to be positive which will support the metals,” she added.
On LME, the metal closed up 6.7% at $1,350 per tonne before making a high of $1,359. Locally, the March contract on MCX also gained by a similar per cent and closed at Rs 67 per kg. Though all the base metals moved up during the week but they ended in red following profit booking with dollar strengthening. Due to a negative UK GDP and industrial data Euro significantly fell which provided support to dollar.
Earlier China imported a significant quantity of zinc in February which was at record levels since 2003. China is importing base metals to restock as it de-stocked most of its stocks in 2008-end. At present since its domestic prices are higher, as compared to the international prices, it is importing more. Also there was the US consumer confidence data gauged by the University of Michigan index which also triggered positive sentiments.
Earlier there was the US jobless data which was negative followed by the US GDP data which was though not as bad as expected. But the real trigger for base metals was the US home sales data that led to a 2-4% jump in the metals complex with zinc gaining the most. |
