Zinc on MCX settled down -0.5% at 180.30 as pressure seen after higher dollar ahead of Wednesday's decision on U.S. interest rates by the Federal Reserve created pressure. The Fed's two-day meeting is expected to conclude on Wednesday with a rate rise, which could boost the U.S. currency, making dollar-denominated metals more expensive for non-U.S. firms and potentially weaken demand.
While prices dropped despite China issued a raft of upbeat data on Tuesday showing the economy got off to a strong start to 2017, supported by strong bank lending, a government infrastructure spree and a much-needed resurgence in private investment. China's factory output rose 6.3 percent in January and February from the same period a year earlier, the country's National Bureau of Statistics reported on Tuesday. Production was estimated to grow 6.2 percent. Fixed-asset investment grew 8.9 percent, also beating expectations.
Trader are eyeing on China as China historically been a major importer of zinc concentrates to top up domestic supply to its smelters. It should in theory be feeling the raw materials pinch, particularly since concentrates imports slumped 49 percent last year and were down again in January to the tune of 7 percent. Yet there has been no discernible impact on refined metal availability in the country. Stocks registered with the Shanghai Futures Exchange stand at 197,895 tonnes, roughly in the middle of the last year's range.
And imports of refined zinc remain highly subdued. Net imports actually fell last year by almost 10 percent to 403,000 tonnes and January's readout of 16,000 tonnes was the lowest since September of last year. Now technically market is under fresh selling and getting support at 177 and below same could see a test of 173.8 level, And resistance is now likely to be seen at 182.8, a move above could see prices testing 185.4.