Zinc on MCX settled down -1.09% at 190 as prices retreated on profit booking after touching a 1-12 month peak on expectations of continued supply shortages. Trading in Asia was thin with many in China already away ahead of the week-long Lunar New Year break, which begins on Friday. Zinc rose to its highest level since mid-December at $2,847 but ended down 1.4 percent at $2,763. The metal used to galvanise steel rose 60 percent in 2016 on fears of shortages after some major mines were closed or suspended. New U. S. single-family home sales fell to a 10-month low in December after three straight months of solid gains, but the housing market recovery remains intact as a tightening labor market boosts wage growth. The International Lead and Zinc Study Group released its initial 2017 report, which found the global market for refined zinc metal was in deficit over the first 11 months of last year with total reported inventories declining over the same time frame. The ILZSG revealed a significant increase in Chinese output while the world’s zinc mine production fell overall by 1.2%. “Global refined zinc metal production over the first eleven months of 2016 was at the same level as the corresponding period of 2015 with increases in China and the Republic of Korea offset by reductions in Australia, India, Japan, Mexico and the United States,” the ILZSG report stated. Although net long positions have been trimmed back following some recent significant deliveries into LME warehouses, the consensus remains positive regarding prices for 2017. Technically market is under long liquidation as market has witnessed drop in open interest by -14.74% to settled at 4276 while prices down -2.1 rupees, now Zinc is getting support at 188.1 and below same could see a test of 186.2 level, And resistance is now likely to be seen at 191.8, a move above could see prices testing 193.6.

Trading Ideas

# Zinc trading range for the day is 186.2-193.6.

# Zinc prices retreated on profit booking after touching a 1-12 month peak on expectations of continued supply shortages.

# The ILZSG released its initial 2017 report, which found the global market for refined zinc metal was in deficit over the first 11 months of last year.

# Trading in Asia was thin with many in China already away ahead of the week-long Lunar New Year break, which begins on Friday