Zinc yesterday traded with the positive node and settled 0.19% up at 103.15 tracking LME zinc prices overnight rallied to the $2,000/mt mark. But Spanish equity markets closed down 4%, with bad loans of banks reaching a 18-year high, and the IMF warned eurozone banks will need to sell $3.8 trillion of assets due to tightening credit in Europe, causing market concerns to improve. As a result, LME zinc prices inched down and rolled back previous gains, and closed at $1,987.5/mt, down $12.5/mt. LME base metal prices failed to extend the upward trend overnight but moved on a downward track. Market concerns intensified ahead of Spain's government bond auction, since markets believe the bond auction will offer a fresh test of confidence in its economy. Spain will auction up to EUR 2.5 billion of two- and 10-year bonds on Thursday. If Spanish yields keep rising or its bond sales are bearish, market concerns over Spanish financial conditions will intensify. It seems that markets are pessimistic toward Spain's government bond auction, weighing down global commodity markets. Spain's two- and 10-year bonds sales are the market focus today. Previously, market rumors reported that the successful Spanish bond sales on Tuesday were caused by human factor and the ECB was only interested in buying German government bonds, and these rumors weighed down base metal prices. For today's session market is looking to take support at 102.7, a break below could see a test of 102.2 and where as resistance is now likely to be seen at 103.6, a move above could see prices testing 104.1.

Trading Ideas:

Zinc trading range for the day is 102.15-104.05.

Zinc rallied as the IMF warned eurozone will need to sell $3.8 trillion of assets due to tightening credit in Europe.

Jiangxi is also planning to expand production of rare earths and other metals such as zinc and lead.

If Spanish yields keep rising or its bond sales are bearish, market concerns over Spanish financial conditions will intensify