Zinc on MCX settled down -1.47% at 187.2 as a stronger US currency dented international investors’ demand. Meanwhile, trading conditions quieted on Friday amid China’s Lunar New Year holiday. Zinc demand is highly dependent on China; therefore, with Chinese buyers and speculators absent from the market the metal will likely see a stronger reaction to other price influences. Reflecting a continued decrease in orders for transportation equipment, the Commerce Department released a report showing an unexpected drop in new orders for durable goods in the month of December. Raw material tightness and thinner profit from falling zinc prices depressed zinc smelter production. When combined with environmental protection inspections and low-demand season, China’s refined zinc output was 465,000 tonnes in December, down 1.8% month-on-month. China’s refined zinc output is expected to fall further in January to 453,000 tonnes, a slide of 2.5% month-on-month, but up 5.3% year-on-year. Production cut at zinc smelters will be less than expected in Q1 2017. China’s refined zinc output will be 1.29 million tonnes in Q1, up 1.6% year-on-year but down 8.5% month-on-month. Inventories at zinc downstream producers averaged 9 days sufficient to production in January, compared to around 14 days in the same period of last year. In the meantime, zinc inventories in Shanghai, Tianjin and Guangdong added 15,300 tonnes to 216,000 tonnes in January. Spot premiums inverted from 200-300 yuan per tonne early in the month to discounts of 70-0 yuan per tonne. . Downstream producers are expected to restart earlier after the 2017 Chinese New Year holiday compared to years past. Technically now Zinc is getting support at 185.7 and below same could see a test of 184.1 level, And resistance is now likely to be seen at 188.8, a move above could see prices testing 190.3.

Trading Ideas:

Zinc trading range for the day is 184.1-190.3.

Zinc prices ended with losses as a stronger US currency dented international investors’ demand.

China’s refined zinc output was 465,000 tonnes in December, down 1.8% month-on-month.

Inventories at zinc downstream producers averaged 9 days sufficient to production in January, compared to around 14 days in the same period of last year