Zinc prices experienced a decrease of 0.59%, concluding at Rs 302.45. This decline was primarily driven by an unexpected increase in supply from China, coupled with renewed apprehensions regarding domestic demand. In November, China’s zinc production experienced a year-on-year increase of 13.3%, reaching 654,000 metric tons, highlighting a significant near-term supply surplus. Weak Chinese macro data further dampened sentiment, as factory output and retail sales growth decelerated, while property investment and sales by floor area continued to decline, reigniting concerns regarding demand-side dynamics.

Nonetheless, the drawbacks were constrained due to the emergence of supply limitations. Multiple zinc mines located in Central and Southwest China are set to undergo scheduled maintenance shutdowns. These interruptions are anticipated to lead to a decrease in zinc concentrate production, with an estimated reduction of 700 metric tons of metal content projected for December.

Inventory dynamics have also become favorable, as zinc stocks in Shanghai Futures Exchange warehouses decreased by 12.3% week-on-week. Globally, inventories outside China are currently at exceptionally low levels. Data from the International Lead and Zinc Study Group indicated that the global zinc market surplus contracted significantly to 20,300 tons in September, while the market deficit diminished to 600 tons in October, suggesting a gradual tightening of the balance.

Zinc is currently undergoing a sustained liquidation phase, as evidenced by a 4.75% decrease in open interest, bringing it down to 2,184, in conjunction with a decline in price. Immediate support is identified at Rs 301.4; a breach of this level may lead to a test of Rs 300.4. On the upside, resistance is positioned at Rs 303.7, and a breach above this threshold may result in prices approaching Rs 305.