Zinc prices experienced a notable decline, closing down 1.86% at Rs 302.95, as market sentiment soured in response to a rise in exchange inventories and a cautious approach ahead of significant US economic data releases. LME zinc stocks surged by 31,075 metric tons, representing a significant 48% increase, which brings total inventories to 95,550 tons and applies immediate pressure on prices. Investor risk appetite has diminished as markets anticipate US data for insights into the interest-rate trajectory.

In China, factory output growth decelerated to a 15-month low in November, while new home prices persisted in their decline, maintaining a spotlight on the ongoing concerns surrounding the property sector. Developer Vanke’s renewed initiatives to garner bondholder backing for debt repayment have underscored the prevailing stress within the sector. In light of the current near-term weakness, it is important to note that the underlying fundamentals present a mixed picture.

Reports indicated that the global zinc market surplus decreased to 20,300 tons in September, down from 32,700 tons in August, suggesting a gradual tightening of the market conditions. Support also emerged from expectations of a potential Fed rate cut following soft US data and supply-side disruptions in China, where several zinc mines are scheduled for maintenance shutdowns in December, likely reducing concentrate availability. Inventories of zinc at the Shanghai Futures Exchange decreased by 12.3% compared to the previous week, whereas stock levels outside of China continue to be notably low.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 12.45% decline in open interest alongside a Rs 5.75 drop in prices, signaling position unwinding. Zinc exhibits immediate support at Rs 300.9, with a potential decline below this level possibly leading to a test of Rs 298.8. On the upside, resistance is positioned at Rs 306.8, with a sustained move above expected to challenge Rs 310.6.