Zinc prices concluded the session with an increase of 0.66%, reaching Rs 364.75, bolstered by persistent supply concerns and a positive outlook for demand from China. Positive macroeconomic data from China enhanced sentiment across industrial metals, as consumer prices increased by 1.2% in April, surpassing market expectations of 0.9%. Additionally, factory-gate prices rose by 2.8%, marking a 45-month high. China’s central bank reaffirmed its dedication to sustaining a suitably accommodative monetary policy while enhancing financial backing for domestic demand and technological innovation, thereby bolstering optimism regarding industrial metal consumption.

The zinc market continues to experience one of the most significant supply deficits among major base metals, even as production levels rise, indicating that supply-side fundamentals remain robust. Decreasing inventories on the London Metal Exchange and reduced treatment charges for zinc concentrate underscored the constriction in raw material availability. Zinc concentrate treatment charges have shown a continued decline, reflecting ongoing supply constraints in the concentrate market. Inventories of zinc at the Shanghai Futures Exchange decreased by 1.8% over the week, while data from SMM indicated a reduction of 12,100 metric tons in zinc concentrate inventories at ports, underscoring a more constrained supply scenario.

However, gains remained constrained following the announcement from Swedish miner Boliden that production at its Garpenberg zinc mine is set to resume in the second quarter. Anticipated supply relief is also projected from the recommencement of operations at the Tara mine and the gradual increase in production at Ivanhoe’s Kipushi project. The International Lead and Zinc Study Group indicated that the global zinc market transitioned to a surplus of 9,200 metric tons in January, reversing the deficit observed in December, though this surplus was still less than that of the previous year. Goldman Sachs anticipates that the zinc market will maintain a modest surplus throughout 2026; however, it forecasts a shift toward tighter conditions beginning in 2027, driven by a deceleration in mine supply growth outside of China.

Global zinc demand is projected to increase by approximately 2% each year until 2027. From a technical perspective, the market is experiencing short covering, evidenced by a 2.87% decline in open interest, which settled at 2199, alongside a price increase of Rs 2.4. Zinc is currently finding support at Rs 362.2, with additional downside support positioned at Rs 359.5. On the upside, resistance is anticipated at Rs 367.2, and a breach of this level may propel prices towards Rs 369.5.