Zinc prices experienced a decline, closing down by 0.47% at Rs 306.6, influenced by revived apprehensions regarding demand following a sequence of disappointing economic indicators from China. In November, China’s zinc production increased by 13.3% compared to the previous year, reaching 654,000 metric tons, highlighting a significant near-term supply surplus. Nonetheless, the downside was constrained as sentiment showed signs of improvement after the unexpectedly robust growth in China’s manufacturing sector in December, representing the first expansion following eight months of continuous contraction.

Support also arose from supply-side factors and speculative purchasing activities. Multiple zinc mines in China are set to undergo scheduled maintenance shutdowns, leading to a decrease in production days and subsequently impacting the availability of zinc concentrate. A mine located in southwest China, which has largely achieved its annual production target, is set to undergo maintenance that may reduce zinc concentrate output by approximately 700 metric tons in metal content. Furthermore, zinc inventories in Shanghai Futures Exchange warehouses experienced a decrease of 4.3% from December 26, indicating a potential tightening in visible stocks.

Zinc concentrate production is anticipated to decrease on a month-on-month basis, which will partially mitigate concerns stemming from elevated expectations for refined output. From a global perspective, the International Lead and Zinc Study Group reported that the refined zinc market deficit narrowed to 600 tons in October.

The market is currently experiencing new selling pressure, evidenced by a 5.95% increase in open interest to 5,522, alongside a decline in prices of Rs 1.45. Zinc establishes a support level at Rs 304.9, with potential further decline towards Rs 303.2. Resistance is identified at Rs 309.1, and a breach above this level may lead to a test of Rs 311.6.