Zinc settled up at 137.90 climbed for a third day in four as stockpiles fell to the lowest since 2010 and before economic and industrial output data from China, the world’s biggest user of base metals. China is projected to report today that gross domestic product grew at 7.5 percent in the second quarter, while retail sales and industrial output rose in June. LME inventories have fallen 29 percent this year to 658,475 tons. The metal used to prevent steel from rusting has risen 12 percent this year, the second-best performer among the six main metals on the LME. Economic data releases from UK and the US overnight was mixed, and Fed Chairwoman Janet Yellen's statement has no new opinion, keeping base metals prices consolidating. Janet Yellen said the US job market remained weak during the testimony to Senate Banking Committee and expressed her concerns over a slow recovery in housing market. As a result, she considered accommodative policies still needed. But Yellen also stated if the economy proves to be stronger than anticipated by the Committee, then increases in the federal funds rate target are likely to occur sooner and to be more rapid than currently envisaged. The US dollar index rallied after the testimony, weighing on base metals. While the US retail sales were reported up 0.2% in June, the worst data since January this year and falling short of forecast. The NY Fed manufacturing index for July, however, exceeded expectations to hit 25.60, its highest since April 2010. Technically market is under short covering and getting support at 137.3 and below same could see a test of 136.7 level, And resistance is now likely to be seen at 138.6, a move above could see prices testing 139.3.

Trading Ideas:

Zinc trading range for the day is 136.7-139.3.

Zinc skyrocketed to 35-month high as inventories on the LME-monitored warehouses continued to dwindle.

LME inventories of the metal slumped almost 35% year-to-date at a time when car sales in the U.S. and China are on the rise.

Zinc daily stocks at Shanghai exchange came down by 198 tonnes.