Zinc prices experienced an increase of 1.96%, reaching Rs 301, driven by ongoing supply concerns stemming from bottlenecks in global smelting operations, despite a rise in mined output. Reports indicates a decline of over 2% in refined zinc production this year, even as mine production has increased by 6.3%. This discrepancy is primarily attributed to restrictions and shutdowns at significant facilities, including smelters in Kazakhstan and the Toho Zinc Annaka plant in Japan. Treatment charges have recovered to $87.5 per ton from previously negative levels at the end of last year, indicative of a constrained refined supply.

In the interim, LME zinc inventories have experienced a significant decline, now standing at merely 37,300 tonnes, a stark reduction from over 230,000 tonnes at the beginning of 2025. This level of inventory accounts for less than one day of global demand, thereby exacerbating the steepest cash-to-three-month price spread observed since 1997. Mitsui Mining and Smelting has reported that its refined zinc output for the second half of fiscal year 2025/26 is projected to be 106,500 tonnes, reflecting a year-on-year decrease of 6.6%.

Conversely, Ivanhoe Mines disclosed an unprecedented quarterly output of 57,200 tonnes from its operations in Congo, reflecting a 37% increase compared to the previous quarter. Data indicated that the global zinc market transitioned to a surplus of 30,200 tonnes in July, following a deficit in June, resulting in a cumulative surplus of 72,000 tonnes for the first seven months of 2025.

From a technical perspective, the market is experiencing short covering, as evidenced by a 4.03% decline in open interest to 2,525 contracts, alongside a price increase of Rs 5.8. Zinc exhibits support levels at Rs 295.8 and Rs 290.6, with resistance identified at Rs 305.5 and Rs 310.