Zinc on MCX settled up 2.36% at 188.35 as support came after U.S. data showing industrial production in December recorded its biggest increase in two years. Investors were looking ahead to GDP and industrial output data on Friday from China. Raw material tightness and thinner profit from falling zinc prices depressed zinc smelter production. When combined with environmental protection inspections and low-demand season, China’s refined zinc output was 465,000 tonnes in December, down 1.8% month-on-month. China’s refined zinc output is expected to fall further in January to 453,000 tonnes, a slide of 2.5% month-on-month, but up 5.3% year-on-year. Production cut at zinc smelters will be less than expected in Q1 2017. China’s refined zinc output will be 1.29 million tonnes in Q1, up 1.6% year-on-year but down 8.5% month-on-month. Zinc inventories in Shanghai, Tianjin and Guangdong added 15,300 tonnes to 216,000 tonnes in January. Spot premiums inverted from 200-300 yuan per tonne early in the month to discounts of 70-0 yuan per tonne. The weak spot market, combined wthi rising risk aversion before holiday precipitated leaving of longs in the futures market. Total positions on SHFE zinc decreased over 20,000 January 17, down 48,000 from a week earlier. The world’s largest zinc miner, Glencore, whose zinc mining cutbacks have really driven this rally will be cautious about restarting idled production. Technically market is under fresh buying as market has witnessed gain in open interest by 14.92% to settled at 6108 while prices up 4.35 rupee, now Zinc is getting support at 185.9 and below same could see a test of 183.3 level, And resistance is now likely to be seen at 189.8, a move above could see prices testing 191.1.

Trading Ideas:

Zinc trading range for the day is 183.3-191.1.

Zinc gained as support came after U.S. data showing industrial production in December recorded its biggest increase in two years.

Investors were looking ahead to GDP and industrial output data on Friday from China.

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