Zinc yesterday settled up 0.17% at 116 tracking LME zinc prices which rosed after China's industry production in July topped expectations, boosting market optimism towards metals demand in China. As a large number of longs entered the market, LME zinc prices soared and touched USD 1955.5/mt, hitting a two-month high and finally closing at USD 1,940/mt, up USD 44.3/mt, or 2.33%. Positive news from China boosted the market. China's CPI in July rose by 2.7% YoY, and PPI dropped 2.3% YoY. The steady goods price index shows China is now under no inflation risk, with PPI declines narrowing. China's large scale industry value added in July rose by 9.7%, higher than 8.9% in June, and the second largest growth since January-February; China's consumer goods retail sales in July were up 13.2% YoY, and fixed assets investments in cities and towns from January through July rose by 20.1% YoY. A series of positive economic data increased market confidence towards demand in China, and pushed up commodity prices. It was reported that China Banking Regulatory Commission has contacted China Securities Regulatory Commission to push that bank credit assets can be transferred to dealers as ABS basic assets, and credit assets management products designed by dealers may be traded on the Shanghai Stock Exchange. That will help increase bank loans quality and is favorable for the banking sector in the long run. Technically market is under short covering as market has witnessed drop in open interest by -0.2% to settled at 4600 while prices up 0.2 rupee, now Zinc is getting support at 115.85 and below same could see a test of 115.7 level, And resistance is now likely to be seen at 116.2, a move above could see prices testing 116.4.

Trading Ideas:

Zinc trading range for the day is 115.7-116.4.

Zinc gained as China's industry production in July topped expectations, boosting market optimism towards demand

China's CPI in July rose by 2.7% YoY, and PPI dropped 2.3% YoY.

Zinc weekly stocks at Shanghai exchange came down by 1535 tonnes