Zinc experienced a modest increase, closing 0.46% higher at Rs 306.25, bolstered by consistently constrained LME inventories and a slight rebound in physical premiums. In September, the global zinc market experienced a significant reduction in surplus, contracting to 20,300 tons from the previous month’s figure of 32,700 tons, as reported by data. In the initial three quarters of 2025, the refined zinc market exhibited a surplus of 120,000 tons, marginally exceeding the 107,000-ton surplus observed in the corresponding timeframe of 2024. Despite supply tightness, weak economic indicators from China have maintained a focus on demand concerns, while diminishing expectations of a near-term Federal Reserve rate cut have contributed to a sense of caution.

LME inventories stand at a critically low 35,875 tons, approaching the lowest levels observed since February 2023, while SHFE zinc stocks have decreased by 0.54%. Globally, zinc inventories outside China have fallen to critically low levels. In October, China’s refined zinc exports experienced a remarkable increase, reaching 8,519 tons, which represents a 243.8% rise compared to September. This surge can be attributed to smelters focusing on international markets in response to a significant squeeze in the London Metal Exchange and a downturn in domestic demand. While LME stocks subsequently rebounded to 45,075 tons, they continue to be historically low.

Previously, tightness had driven spot premiums above $300 per ton, but they are now relaxing to approximately $100 per ton. Production patterns exhibit a mixed landscape: September refined zinc output decreased by 4% month-on-month, yet increased by 20% year-on-year. Cumulatively, production from January to October is projected to rise by 10% year-on-year, bolstered by the resumption of capacity across various provinces.

Zinc is currently experiencing a short covering phase, evidenced by a 16.81% decline in open interest. Support is positioned at Rs 303.3, with further vulnerability extending to Rs 300.2. Resistance stands at Rs 308.2, and a breakout could propel prices towards Rs 310.