Zinc on MCX settled down -2.06% at 168.40 dropped tracking weakness from LME Zinc which hit a three-month low on Monday as supply concerns eased and demand remained weak in top metal consumers such as China. LME Zinc prices touched a peak of $2,980.50 a tonne in mid-February on worries that major mine closures last year would lead to severe shortages. London Metal Exchange three-month zinc slid 2.7 percent to close at $2,618 a tonne, the weakest since Jan. 6. Also pressuring the market was weakness in Chinese steel prices and news that two flood-hit mines in Peru were ready to restart. Chinese smelters may prove less resilient in the coming months after they announced that 540,000 tpy of capacity would be put on maintenance for unspecified period. The LME spec positioning in zinc looks fairly elevated considering that the net spec length – at 78,473 lots as of March 24 – is at 79% of the all-time record (99,251 lots) from 2015. So this bout of long liquidation should not surprise investors. The ILZSG estimates that the market was in a deficit of 27,400 tonnes in January 2017 compared with a surplus of 6,000 tonnes in January 2016. The zinc market was in a deficit of 268,000 tonnes in 2016 compared with a surplus of 189,000 tonnes in 2015. The tighter fundamentals were driven by the demand side rather than the supply side, essentially owing to a notable surge in US apparent demand. Technically market is under fresh selling as market has witnessed gain in open interest by 13.98% to settled at 5902, now Zinc is getting support at 166.6 and below same could see a test of 164.8 level, And resistance is now likely to be seen at 171.5, a move above could see prices testing 174.6.

Trading Ideas:

Zinc trading range for the day is 164.8-174.6.

Zinc prices dropped dragged down by weakness in steel and also after news that two flood-hit mines in Peru were ready to restart.

Zinc prices touched a peak of $2,980.50 a tonne in mid-February on worries that major mine closures last year would lead to severe shortages.

Globally speaking, zinc supply has already been rising again since September.