Zinc prices declined by 0.88% to close at Rs 319.55, influenced by profit-taking and a stronger U.S. dollar as markets adjusted in anticipation of Donald Trump’s nomination of former Fed Governor Kevin Warsh as the next Federal Reserve Chair. The appreciation of the dollar has diminished demand for base metals, leading certain investors to secure profits following the recent upswing.

Nonetheless, the drawbacks associated with zinc were constrained owing to ongoing supply-side apprehensions. Refined zinc production is projected to have decreased by approximately 2% last year, even as mined output experienced a 6.3% increase. This discrepancy can be attributed to smelter restrictions in Kazakhstan and Japan, notably the shutdown of the Toho Zinc Annaka facility. Treatment charges have recovered to approximately $100 per tonne from significantly negative levels observed late last year, indicating a reduction in concentrate availability.

Inventory data highlight the supply constraints, with LME stocks decreasing to approximately 110,000 tonnes from 230,500 tonnes at the beginning of last year, while Shanghai Futures Exchange inventories experienced a significant decline of 10.9% last week. Scheduled maintenance shutdowns at several Chinese mines are anticipated to further constrain concentrate supply. On the demand side, apprehensions persist in light of mixed macroeconomic data from China, despite December’s industrial output exceeding expectations.

In December, China’s refined zinc production reached an unprecedented 675,000 tonnes, contributing to a total of 7.41 million tonnes for the year 2025, as smelters took advantage of elevated prices. From a technical perspective, the market is experiencing long liquidation, evidenced by a 19% decline in open interest. Zinc establishes a support level at Rs 311.3; a decline below this threshold could lead to a test of Rs 302.9. Resistance is observed at Rs 326.3, with a breach potentially paving the way forward.