Zinc prices experienced a slight increase, closing 0.28% higher at Rs 301.95, bolstered by consistently constrained LME inventories and a modest rebound in physical premiums. Nonetheless, the potential for growth appeared constrained as disappointing economic indicators from China dampened demand sentiment, while the anticipation of a U.S. rate cut in December diminished. Several Federal Reserve policymakers conveyed a sense of caution regarding inflation trends, indicating that additional easing may not be justified this year, which has tempered broader risk appetite. Market participants were also anticipating the release of postponed U.S. economic data, including the September jobs report, as the government shutdown interfered with reporting timelines.
Inventory conditions persist in providing support to zinc, as LME warehouse stocks remain close to their lowest level since February 2023, recorded at 35,875 tonnes. Recent weeks have seen a decline of 8% in SHFE zinc inventories, now totaling 100,208 tonnes, indicative of a tightening supply situation. In the latest macroeconomic indicators from China for October, there are initial indications of stabilization. The Consumer Price Index has registered a positive change of 0.2%, while the decline in the Producer Price Index has moderated to -2.1%. These developments suggest a potential improvement in confidence regarding a gradual economic recovery.
Refined zinc production trends exhibit a mixed performance: output in September decreased by 4% compared to the previous month, yet experienced a substantial increase of over 20% year-on-year. According to the reports, there was a surplus of 47,900 tonnes in August and a cumulative surplus of 154,000 tonnes for the initial eight months of 2025.
From a technical perspective, the market is experiencing short covering, evidenced by a 5.39% decline in open interest to 2,455, alongside a price increase of Rs 0.85. Support is established at Rs 300.9, with further levels at Rs 299.8, whereas resistance is positioned at Rs 303.6, beyond which prices could approach Rs 305.2.