Zinc prices experienced a modest increase, closing up by 0.18% at Rs 311.9, bolstered by a depreciating U.S. dollar and stronger-than-anticipated economic indicators from China. The dollar index experienced a decline following U.S. President Donald Trump’s reaffirmation of his intention to implement an additional 10% tariff on imports from eight European countries, which exerted pressure on the greenback and provided slight support to base metals. Sentiment improved following a 5.2% year-on-year increase in China’s industrial output for December, surpassing expectations, alongside fourth-quarter GDP growth that exceeded forecasts marginally.

Nonetheless, the potential for zinc to rise remained constrained due to ongoing apprehensions regarding China’s fundamental demand prospects, which were reflected in a range of mixed macroeconomic indicators. On the supply side, zinc inventories in warehouses monitored by the Shanghai Futures Exchange increased by 3.3% compared to the previous week, indicating sufficient near-term availability.

The LME cash zinc contract persisted in trading at a discount of $14 per ton relative to the three-month contract, indicative of a comfortable spot supply situation. Concurrently, a number of Chinese mines are set to undergo routine maintenance shutdowns, which may lead to a temporary constriction in concentrate supply. This includes a mine in southwest China anticipated to reduce output by approximately 700 tons of metal content.

From a technical perspective, the market is experiencing short covering, as evidenced by a 12.85% decline in open interest alongside a modest increase in prices. Zinc exhibits support at Rs 310.3, with additional downside anticipated at Rs 308.7. On the upside, resistance is positioned at Rs 314.2, and a breach above this threshold may lead to prices approaching Rs 316.5.