Zinc settled down by -3.33% at 186 on profit booking as prices struggled to maintain gains in the face a more than 4 percent drop in oil prices, which tempered appetite for assets seen as higher risk. Investors see zinc as the metal with the tightest supply situation "given the multitude of closures that have taken place over the past two years." Nyrstar is increasing hedge selling for expected zinc output to evade downward pressure for zinc prices. China's National Development and Reform Commission approved a 247 billion yuan ($36 billion) railway plan to link Beijing to neighbouring cities. Activity in China's manufacturing sector likely held onto a modest expansionary trend this month, a poll showed, as industrial firms continued to benefit from higher producer prices and a recovery in demand. China's refined zinc supply peaked at 5.53 million tonnes in 2015 after years of expansion. On the consumption side, zinc consumption increased nearly 200,000 tonnes this year from last year, leaving refined zinc deficit at 350,000 tonnes this year. Zinc consumed by China will slow in 2017, while zinc consumption in Europe, US, India and Southeast Asia countries will be better than this year. China's refined zinc output will be 5.51 million tonnes in 2017, with 640,000 tonnes of imports and 10,000 tonnes of exports. Zinc apparent consumption will be 6.14million tonne, and real consumption is expected to be 6.43 million tonnes. Technically market is under long liquidation as market has witnessed drop in open interest by -28.46% to settled at 3044 while prices down -6.4 rupee, now Zinc is getting support at 181.1 and below same could see a test of 176.3 level, And resistance is now likely to be seen at 193.7, a move above could see prices testing 201.5.

Trading Ideas:

Zinc trading range for the day is 176.3-201.5.

Zinc dropped on profit booking as prices struggled to maintain gains in the face a drop in oil prices, which tempered appetite for assets seen as higher risk.

Nyrstar is increasing hedge selling for expected zinc output to evade downward pressure for zinc prices.

China's refined zinc supply peaked at 5.53 million tonnes in 2015 after years of expansion.