Zinc prices concluded the trading session down 1.59% at Rs 312.8, influenced by regulatory and macroeconomic challenges emanating from China. Sentiment deteriorated following directives from Chinese regulators mandating exchanges, such as the Shanghai Futures Exchange, to eliminate high-frequency trading servers, thereby curtailing speculative engagement. Concerns regarding demand prospects remained as China’s 2025 new bank lending fell to a seven-year low, indicative of a subdued borrowing appetite in the context of an extended downturn in the property sector.
In light of the prevailing uncertainties, projections indicate that China’s economic growth may decelerate to 4.5% in 2026–27. Concurrently, zinc inventories at SHFE warehouses have increased by 3.3% compared to the previous week, thereby amplifying concerns regarding a near-term supply surplus. On the global front, the LME cash zinc contract traded at a $14 per ton discount to the three-month forward, suggesting a lack of robust demand in the near term.
Meanwhile, expectations are building that 2026 could mark a shift from deficit to surplus, after LME stocks surged by over 84,000 tons in November–December following earlier off-warrant depletion. In November, China’s refined zinc production increased by 13.3% compared to the previous year, reaching 654,000 tons, thereby contributing to supply-side pressures. Nonetheless, the potential for downside may be limited by forthcoming maintenance activities at mines in China.
Shutdowns are planned for several operations in the central and southwest regions, which may lead to a reduction in zinc concentrate output by approximately 700 tons of metal content, thereby constraining the availability of raw materials. The market is experiencing a phase of long liquidation, evidenced by a 7.26% decline in open interest in conjunction with decreasing prices. Zinc exhibits support at Rs 310.9; a breach beneath this level may lead to a test of Rs 309. Resistance is identified at Rs 315.8, with a breakthrough potentially leading to Rs 318.8.