Zinc prices experienced a decline of -1.3%, concluding at Rs 341.8, influenced by reports that Swedish miner Boliden intends to recommence production at its Garpenberg mine in the second quarter, thereby alleviating certain supply apprehensions. Nonetheless, losses were contained as short-term supply constraints persist, supporting the market due to limited availability of raw materials. Fundamentally, the market exhibits a mixed supply scenario. LME inventories have been on a downward trajectory, and the diminishing Cash-3M contango suggests a constricting physical market structure.
Treatment charges for zinc concentrate have experienced a continued decline, indicating limited feedstock availability for smelters. Inventories at the Shanghai Futures Exchange decreased by 1.8%, while port inventories of zinc concentrate experienced a significant decline of 12,100 mt week-on-week, underscoring the constrained supply environment. While persistent mine disruptions bolster prices, some alleviation is anticipated from the recommencement of Boliden’s Tara mine and the gradual increase in production at Ivanhoe Mines’ Kipushi project.
On the demand side, the enhancement of industrial activity in China provides a degree of support; however, overall sentiment continues to be wary, influenced by geopolitical tensions and apprehensions regarding global economic growth. The International Lead and Zinc Study Group reported a market surplus of 9,200 metric tons in January, a decrease from the previous year. Meanwhile, Goldman Sachs anticipates a modest surplus in 2026, followed by potential deficits emerging beyond 2027 as the pace of supply growth decelerates.
From a technical perspective, the market is experiencing long liquidation, as evidenced by a -0.9% decrease in open interest to 1,877, which suggests a process of position unwinding. Immediate support is identified at Rs 339.4, with a breach below possibly challenging Rs 336.9. On the upside, resistance is positioned at Rs 345.5, and a sustained movement above this level could propel prices toward Rs 349.1.