Zinc prices increased by 1.75%, concluding at Rs 349.45, buoyed by a more favorable outlook regarding U.S.-Iran ceasefire developments following the declaration of an indefinite extension. This alleviated short-term geopolitical anxieties while maintaining a risk premium. Further backing was provided by the constriction of supply dynamics, as LME inventories fell to a one-month low, and decreasing treatment charges spurred short covering within the market.

The market fundamentally continues to exhibit signs of near-term tightness. Inventories at the Shanghai Futures Exchange have exhibited a downward trend, signaling a decrease in physical availability, while mine closures and operational disruptions have additionally limited supply. Concurrently, the resurgence of industrial activity in China, evidenced by factory data indicating a return to expansion, has bolstered demand expectations. The accommodative stance of China’s central bank, coupled with increasing factory-gate prices, indicates a robust underlying resilience within the industrial sector.

Nonetheless, certain pressures persist due to overarching macroeconomic concerns, especially regarding the possible economic ramifications of continuing geopolitical tensions. The resumption of significant mining operations, including Tara and the increased output from Kipushi, is anticipated to maintain a slight surplus in the global zinc market for the current year. Data indicates that the market transitioned into a modest surplus in January, albeit considerably reduced compared to the surplus observed in the preceding month.

From a technical perspective, the market is experiencing short covering, evidenced by a 2.35% decrease in open interest, bringing it down to 2,077. Support is identified at Rs 345.1, with additional downside potential at Rs 340.6, whereas resistance is positioned at Rs 352.1. A breach of this level may propel prices towards Rs 354.6.