Zinc prices saw a modest rise of 0.14%, finishing at Rs 348.2, as falling energy prices enhanced sentiment in the industrial metals sector and eased concerns about a potential slowdown in global economic growth. The market maintained its momentum, supported by tightening near-term supply conditions, as the global zinc deficit remains one of the most notable among base metals, despite the rise in mine production. While global output is anticipated to increase this year, much of this growth is concentrated in China, as smelters in other regions continue to reduce operations owing to cost pressures and operational difficulties. The reduction in treatment charges for zinc concentrate provided additional support, highlighting the limited availability of raw materials.
Decreasing inventories on the London Metal Exchange, coupled with a tightening Cash-3M contango structure, suggest a strengthening of physical market conditions. Zinc concentrate inventories at Chinese ports have reportedly decreased by 12,100 metric tons week-on-week, highlighting the tight supply situation. Nonetheless, the increases were limited after the announcement from Swedish miner Boliden concerning the expected resumption of production at its Garpenberg zinc mine in the second quarter. Expectations are building regarding further supply alleviation resulting from the recommencement of Boliden’s Tara mine, in conjunction with the incremental increase in production at Ivanhoe’s Kipushi project.
The improvement in industrial activity data from China has bolstered market sentiment on the demand side; however, persistent geopolitical tensions in the Middle East continue to contribute to a significant level of economic uncertainty overall. Mitsui Mining and Smelting of Japan has disclosed plans to increase refined zinc production by 3.2% year-on-year in the first half of the 2026/27 fiscal year. The recent report from the International Lead and Zinc Study Group indicates that the global zinc market shifted to a surplus of 9,200 metric tons in January, after experiencing a deficit in December.
Goldman Sachs projects a slight market surplus in 2026; nonetheless, it predicts progressively tighter conditions post-2027 as mine supply growth slows down. From a technical perspective, the market is witnessing short covering, as indicated by a 3.63% decrease in open interest, which has settled at 1,989, while prices have risen by Rs 0.5. Zinc is presently finding support at Rs 346.8, and a decline beneath this threshold could test the Rs 345.3 level. Resistance is identified at Rs 349.7, and breaching this level could drive prices up to Rs 351.1.