Zinc prices experienced a decline of 0.5%, settling at Rs 300.45, influenced by subdued demand from China and the strengthening of the U.S. dollar, which dampened purchasing interest. The most recent figures from the Shanghai Metals Market indicate that zinc treatment charges have increased to $87.5 per ton, marking a notable rebound from the negative levels observed late last year, which is indicative of a sufficient supply of concentrate. In October, China’s private sector PMI declined to 50.6, falling short of expectations, while the official manufacturing PMI contracted for the seventh consecutive month at 49.0, indicating ongoing pressure on industrial demand.

Nonetheless, LME zinc inventories have remained exceptionally constrained, declining to a mere 35,200 tons — a reduction of nearly 85% since the beginning of 2025 — marking the lowest level since early 2023. The pronounced backwardation in LME spreads, highlighted by a cash contract premium of $170, indicates a significant short-term supply constraint. In contrast, China’s domestic zinc inventories increased significantly to 162,000 tons, underscoring a widening gap between surplus conditions within China and severe shortages abroad.

The International Lead and Zinc Study Group reported a global refined zinc market surplus of 47,900 tons in August, which elevates the year-to-date surplus to 154,000 tons, an increase from 138,000 tons in the same period last year. In September, China’s refined zinc production experienced a month-on-month decline of 4%, yet it demonstrated a robust year-on-year increase of 20%. Anticipations for further output growth in October remain optimistic.

Zinc continues to experience long liquidation, as evidenced by a 1% decline in open interest, now at 2,581. Support levels are identified at Rs 299.6 and Rs 298.6, whereas resistance levels are positioned at Rs 301.3 and Rs 302. A breach of resistance could potentially facilitate short-covering profits.