Zinc prices experienced a slight decline of 0.05%, concluding at Rs 284.9, as traders took the opportunity to realize profits following recent increases. The recent pullback occurred despite LME zinc stocks declining to their lowest level since May 23, now at 48,825 tons, representing a nearly 80% decrease this year. In a display of robust market sentiment, the premium of cash LME zinc over the three-month contract has escalated to $51 per ton, marking its peak since October 2024 and indicating a constriction in near-term supply.

Nonetheless, upward pressure was observed due to increasing inventories on the Shanghai Futures Exchange, which rose by 4.9% week-on-week, coupled with heightened domestic production in China. In August, China’s refined zinc production reached its highest monthly level since the first quarter of 2024, with projections for September output at 609,800 tons, indicating a slight decrease compared to the previous month. Nonetheless, the potential for downside is limited as smelters contend with overcapacity pressures, which may lead to output reductions. Significant rainfall has already interrupted operations in certain regions of South China.

On a global scale, supply indicators present a varied picture—Peru’s Antamina mine anticipates a 67% increase in zinc production this year, reaching 450,000 tons, whereas previous reductions from Teck’s Red Dog and Nyrstar have constrained availability. Reports says that the global zinc deficit decreased to 27,200 tons in June, while the first half of 2025 continued to exhibit a refined zinc surplus of 47,000 tons.

Zinc is currently experiencing new selling pressure, as evidenced by a 5.86% increase in open interest to 3,072, while prices have decreased by Rs 0.15. Support stands at Rs 283.5; a decline below this level may lead to a test of Rs 282.1. Conversely, resistance is identified at Rs 287.4, with potential upward movement extending gains towards Rs 289.9.