Zinc is the favored industrial metal to gain next year, according to a survey by the LME. A global industry group is forecasting supply deficits in 2014 and 2015.
Zinc prices traded lower last week for the most of the month to end almost flat amid volatile dollar against a basket of currencies and as China’s gross domestic product in the third quarter rose 7.3 percent from a year earlier, compared with the 7.5 per-cent growth in the previous three months. China's economy is likely to grow at its slowest pace in 24 years this year and will cool further in 2015, weighed down by a cooling property sector and factory overcapacity and as top leaders push structural reforms, polls showed. Demand of zinc will exceed production by 403,000 tons in 2014, driven mainly by in-creasing usage in China for steel-sheet production, the International Lead and Zinc Study Group said.
The sup-ply deficit is forecast at 366,000 tons in 2015. Shanghai zinc stockpiles reached 143,206 tonnes, the lowest in five years, while the futures curve is showing signs of stress, with cash prices having traded at a premium against third-month prices for the past month. Stockpiles in warehouses monitored by the London Metal Exchange dropped to 717,050 metric tons, the lowest since Aug. 12. Chinese base metals demand has improved slightly this month on the back of orders from manufacturers before the Christmas and Lunar New Year sales sea-son, traders said.
That, plus tentative signs of economic growth, has provided some support to metals prices recently. The fall in Chinese home prices in September wiped out gains in the property market scored in the past year, raising expectations the government will have to implement more economic sup-port measures to cushion the blow. Zinc is the favored industrial metal to gain next year, according to a survey by the LME. A global industry group is forecasting supply deficits in 2014 and 2015. Demand will exceed production by 403,000 tons in 2014, driven mainly by increasing usage in China for steel-sheet production, the International Lead and Zinc Study Group said. The supply deficit was forecast at 366,000 tons in 2015.
Zinc prices traded highly volatile last week to form Lower Top- Lower Bottom on monthly charts at MCX. Prices breached the previous month's low of Rs 134.60/kg but gained strong footing as bulls came back with full vigor to take the counter higher towards Rs 144.40/kg. Prices are forming Doji candle on monthly chart, an indication of wrangle between bulls and bears. On weekly charts, prices seem to be consolidating before taking a fresh move. This consolidation is a part of longer term uptrend after prices broke out above Rs 120/kg in the month of August last year. The recent top of Rs 146 odd levels marks 61.8% retracement of down-ward journey of the metals from Rs 208.3/kg to sub Rs 50/kg levels touched in December 2008. Monthly closing above Rs 148/kg may open gates for more upside in the counter with near term support seen around Rs 131/kg at MCX.