Zinc settled up 0.85% at 136.35 on expectations of tightening supplies. Zinc prices also seen supported this year, lifted by expectations that mine closures and declining ore grades would lead to shortages. Doubts about the outlook for European demand remain, however, with recent data from Germany pointing to a soft patch. The US job openings in May were reportedly up to the highest since August 2007, while the quits rate was unchanged at 1.8%. In Europe, trade data in Germany outstripped April’s reading and expectations in May, but that in France came in disappointing. UK manufacturing output grew by 3.7% YoY in May, missing a 4.4% rise in April and the expected 5.6% increase, while the country’s industrial output rose by 2.3%, short of April’s reading and forecasts. Meanwhile, shares in Commerzbank, Germany’s second-largest bank, fell on Tuesday after news that it could suffer at least USD 500 million in penalties. This put a damper on European stocks as a whole. LME zinc prices opened at USD 2,264/mt overnight, and hovered around USD 2,260/mt. LME zinc prices climbed to USD 2,318.5/mt, a record high since August 2011, and closing the day at USD 2,276/mt, up USD 11.25/mt or 0.5%.Meanwhile, Europe pledged that it will provide natural gas for Ukraine starting from September to counter the threat from Russia that it will cut supply to Ukraine. Technically market is under fresh buying as market has witnessed gain in open interest by 0.26% to settled at 6516 while prices up 1.15 rupee, now Zinc is getting support at 134.8 and below same could see a test of 133.3 level, And resistance is now likely to be seen at 137.7, a move above could see prices testing 139.1.

Trading Ideas:

Zinc trading range for the day is 133.3-139.1.

Zinc raced to its highest in nearly three years on expectations of tightening supplies.

Zinc prices also seen supported this year, lifted by expectations that mine closures and declining ore grades would lead to shortages.

Doubts about the outlook for European demand remain, however, with recent data from Germany pointing to a soft patch.