Market Outlook

24-12-19 Daily Crypto & Metals Technical Research Report


India Base Metals: Zinc down on concern over higher supply next year

  • Futures contracts of zinc were in the red on the Multi Commodity Exchange of India and the London Metal Exchange today on rising concern over surplus supply next year, analysts said.
  • Reports citing said global zinc ore production could rise 2.4% to 13.5 mln tn next year as miners would restart idle mines to benefit from the prevailing higher prices.
  • “Among the world’s major zinc producers, Australia will likely maintain its production growth, while India could increasingly drive global zinc mine production growth as the country’s key miner Hindustan Zinc implements a large-scale expansion plan.
  • Several other mines, including new ones, are also set to become operational by 2020-21.
  • Earlier this year, zinc prices rose sharply after Vedanta’s Skorpion refinery in Namibia was closed for four months due to depleted stocks. The sudden disruption led many investors to place their bullish bets on the metal, prices of which were largely steady in the first half of the year.
  • Aluminium prices also were under pressure due to low physical market demand and higher stockpile at LME-monitored warehouses.
  • Aluminium stockpile at LME-accredited warehouses have been stable at 1.48 mln tn for the past three trading days.
  • “Weak physical demand, along with subdued demand for finished products, has largely weighed on Aluminium prices.
  • S&P Global Rating today lowered its forecast for Aluminium prices to $1,900 per tn next year due to a slowdown in the global automotive industry.
  • Base metals, including copper, nickel, and lead, were in a thin range today as investors preferred to stay on the sidelines ahead of the trading holidays for Christmas and New Year.
  • “Investors tend to exit their positions ahead of such holidays. In the coming week, I expect (base) metals to largely remain in a confined range due to low volumes and a firm US dollar.
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