Zinc declined by 0.79% to Rs 306, influenced by a stronger dollar, diminished risk appetite, and profit-taking following the recent rally. Market sentiment was shaped by a confluence of mixed global fundamentals. The global zinc market surplus contracted to 20,300 tons in September, down from 32,700 tons in August, as reported by ILZSG, suggesting a shift towards a more balanced market. Weak U.S. retail sales and soft consumer sentiment have reinforced expectations for a potential Fed rate cut in December, providing some support to prices. Developments related to supply in China have generated additional interest. In December, maintenance shutdowns at various zinc mines throughout Central and Southwest China are anticipated to lead to a decrease in concentrate output, amounting to approximately 700 tons in metal content.

SHFE zinc inventories decreased by 4.42% since last Friday, indicating either a rise in demand or a decline in supply inflows. Nonetheless, the potential for upward movement was constrained as LME zinc inventories increased by 47% in November, reaching 49,925 tons, which alleviated global supply apprehensions. Nonetheless, the elevated $135/ton cash-to-three-month premium indicates a persistent tightness in prompt material.

China’s refined zinc trends have introduced additional complexity: September output decreased by 4% month-on-month but experienced a significant increase of over 20% year-on-year, while cumulative production from January to September rose by nearly 9%. In October, output is anticipated to rise by 4% month-on-month and 22% year-on-year, even in the face of extensive smelter maintenance in crucial producing regions.

Currently, the market is experiencing renewed selling pressure, as indicated by a 4.19% increase in open interest, reaching 3,130. Zinc is currently supported at Rs 304.9, with potential for further decline towards Rs 303.7. Resistance is noted at Rs 308.2, and a breakout could elevate prices to Rs 310.3.