How are Zinc Rates Decided?
The Zinc price in India is a combination of various factors starting with the demand and supply factors. In India, zinc prices are fixed based on the spot zinc price that is quoted in the international spot markets. Spot zinc price is the price at which investors can buy zinc at a spot marketplace for immediate settlement. The domestic zinc price correlates with the spot zinc prices and is determined based on the price in the spot marketplace.
The zinc price is also influenced by external and internal market factors such as the costs of import, government subsidies (if any), currency value etc. These factors, when combined, cause fluctuations in the zinc price regularly. Furthermore, the zinc price quoted on the Multi Commodity Exchange as the MCX zinc price also determines the zinc price in India.
What are the factors that influence the zinc price?
With the applications of zinc spread across various sectors, numerous factors can influence the zinc price. Hence, while searching what the zinc price today is, consider these factors that influence the zinc price:
Zinc Demand: China is one of the biggest consumers of zinc worldwide and highly influences the zinc live price. Being an emerging country, it is the biggest investor in infrastructure. Hence, the demand for zinc from China along with the demand from other countries results in huge fluctuations in zinc prices.
Mine Supply: Similar to the zinc demand, the supply factor for zinc is also a crucial factor influencing the zinc price. Top zinc mining countries such as Peru, Australia, China etc., contribute highly to the supply of zinc to other countries. If the supply is interrupted or exceeds the overall demand, the zinc prices are influenced.
Economic Events: Commodities such as Zinc have always been the haven for investors to tackle the resulting fall in other asset classes based on negative economic conditions. If the economy is not doing well, investors tend to invest more in commodities such as zinc based on MCX zinc price or the spot zinc price to protect their investments.
Why should you invest in Zinc?
Zinc is a necessary metal consumed in heavy volumes worldwide. However, investors also use zinc to trade and achieve their set investment goals. Here are the benefits of investing in zinc:
Diversification: Commodities have an inverse relationship with other asset classes and are not influenced by how the other asset classes are performing. It makes commodities such as zinc an ideal investment option to provide diversification. In the case other asset classes are not performing well, zinc investments may offset the losses made.
Volatility: Zinc prices fluctuate regularly based on various market factors. The volatility allows investors to make profits based on the price difference between cost and selling price. If the fluctuations in zinc price are positive, investors stand to make good profits over time.
Inflation: If a country is going through inflation, it can force the investments in other asset classes such as equities to temporarily lose a significant value. In such a case, commodities ensure your investments are protected as commodities have an inverse price relationship with the equity market.
How to Invest in Zinc?
Based on your investment choice, you will need to open a Demat account or derivatives account to invest in zinc in India. Afterwards, you can invest in zinc through the following investment options:
You can invest in physical zinc bullion such as ingots. However, you will have to find a zinc trader who sells physical zinc. You will have the sole responsibility to incur costs on the storage and safe-keeping of the physical zinc and to find a buyer.
You can invest in zinc through zinc futures that are listed on the MCX and quoted with MCX zinc price. Futures contracts are derivative contracts that allow two parties to buy or sell a predetermined quantity of a particular asset such as zinc at a predetermined price on a predetermined future day. You will need a derivative account to invest in Zinc futures.
You can invest in zinc by investing in the stocks of companies that are associated with the extraction, production, and supply of zinc and related products. For investing in zinc stocks, you will need to open a Demat account.
You can invest in zinc through Exchange-Traded Funds that create a basket of securities and track the performance of a specific index. Zinc ETFs are listed on various stock exchanges and require a Demat account for trading.