MCX settled down -2.88% at 178.85 as LME zinc finished the day down 3.1 percent at $2,770 due to concerns over failure in output cut by zinc smelters. Zinc prices standouts among a brightening outlook for base metals, with supply constraints and China-driven demand set to lift prices in coming months. Zinc mines in Huayuan County, Hunan Province were forced to slash or suspend production recently since the region stepped up environmental protection.
Some mines that had passed inspections were also affected by this round of environmental protection and will delay restarts until late April or early May. Activity in China's manufacturing sector unexpectedly grew at its fastest pace in nearly five years in March, adding to evidence that the world's second-largest economy has gained momentum early this year, an official report showed.
Federal Reserve official's seemingly dovish remarks and uninspiring data on the U.S. economy doused the sanguine mood from earlier in the week. Korea Zinc Inc, the world's third-largest zinc smelter, has agreed to take a 15 percent drop in annual processing fees for 2017 as smelters grapple with a dearth of mine supply. The South Korean firm agreed annual treatment charges with Canada's Teck Resources of $172 per tonne, citing unidentified people with knowledge of the matter.
The first major deal of the year, it is likely to set the global benchmark and compares to $188 a tonne in 2016 agreed between Teck and Glencore, the deal that set last year's benchmark. Technically market is under fresh selling as market has witnessed gain in open interest by 0.38% to settled at 4231, now Zinc is getting support at 177 and below same could see a test of 175 level, And resistance is now likely to be seen at 182.4, a move above could see prices testing 185.8.