Zinc concluded the day with a gain of 0.68%, reaching Rs 290.2, bolstered by declining inventories and increasingly constrained supply conditions in China. LME stocks have experienced a decline exceeding 5% over the past three days, now standing at 40,500 tonnes, which represents an 80% decrease year-to-date. Concurrently, zinc inventories on the Shanghai Futures Exchange have also decreased by 2.5% compared to the previous week. The premium of cash zinc over the three-month contract increased to $51 per ton, marking its highest level since October of the previous year, indicative of robust near-term demand in the context of declining inventories.
On the policy front, the European Commission’s plan to impose steep tariffs of 25–50% on Chinese steel imports further supported sentiment, aiming to address global overcapacity that has pressured steel margins and impeded investment in Europe’s decarbonization initiatives. In August, China’s zinc production reached its peak monthly level since early 2024. However, projections indicate a slight decline in September output, expected to decrease by 16,400 mt to 609,800 mt.
This downturn is anticipated to be constrained, as miners and refiners encounter pressures for capacity reductions. Previous disruptions, such as Teck Resources’ Red Dog mine experiencing a 20% decline in Q1 output and Nyrstar declaring a 25% annual reduction, underscore the potential risks to supply. According to data, the global zinc market experienced a surplus of 30,200 tons in July, contributing to a total surplus of 72,000 tons for the first seven months of 2025, a decrease from the 185,000 tons recorded in the same period the previous year.
From a technical perspective, there was a noticeable increase in fresh buying interest, as evidenced by a 1.82% rise in open interest, reaching a total of 3,572 contracts. Zinc is currently supported at Rs 288.5; a decline below this level would reveal Rs 286.7 as the next target. Conversely, resistance is identified at Rs 291.3, and surpassing this threshold may lead prices towards Rs 292.3.