Zinc declined by 0.76%, finishing at Rs 321.15, as it mirrored a wider market downturn, with Chinese traders withdrawing in observance of the Lunar New Year holiday. Sentiment was further dampened by increasing inventories, as stocks in Shanghai Futures Exchange warehouses surged by 23.1% week-on-week. Demand has weakened following the completion of pre-holiday restocking by downstream buyers, and inventories are anticipated to increase further during the seasonal slowdown.

Nonetheless, losses were limited by persistent supply concerns. Despite an increase in mined output last year, refined production experienced a decline of approximately 2%, attributed to smelter restrictions in Kazakhstan and Japan, notably the shutdown of the Annaka facility. Temporary mine suspensions in Southwest and Central China are anticipated to reduce concentrate supply in the short term.

Simultaneously, the recommencement of operations at Boliden’s Tara mine and the gradual increase in production at Ivanhoe Mines’ Kipushi project indicate a positive trend in global supply dynamics. The International Lead and Zinc Study Group reports that the global zinc market experienced a modest deficit of 7,700 tons in November, yet it continues to show an overall surplus for the year. In December, China’s refined zinc production reached an unprecedented level of 675,000 tonnes.

From a technical perspective, the market is experiencing long liquidation, evidenced by a 7.65% decline in open interest. Support is identified at Rs 320, with additional potential decline towards Rs 318.8. Resistance is positioned at Rs 322.8, with a potential upward breach possibly challenging Rs 324.4.