Zinc prices concluded the trading session down by 0.8% at Rs 367.45, influenced by profit-taking activities. This decline occurred against a backdrop of renewed uncertainty regarding the Iran conflict, which has led to an uptick in crude oil prices and reignited inflation concerns across global markets. Investors exhibited a degree of caution concerning the overarching macroeconomic landscape, as uncertainties surfaced regarding the prospect of a prompt resolution to the geopolitical tensions in the Middle East. Nevertheless, the decline in zinc prices has been constrained by increasingly stringent global supply conditions, which have arisen from a succession of operational disruptions at key production facilities.
Supportive sentiment emerged following Nexa Resources’ temporary suspension of operations at its Cajamarquilla zinc smelter in Peru, the largest zinc smelter in Latin America, due to a fire that damaged critical infrastructure. Additionally, Kazzinc, which is owned by Glencore, has maintained operations at a diminished capacity subsequent to an explosion at its zinc and lead facilities in Kazakhstan. These disruptions compounded pre-existing worries in the refined zinc market, where the International Lead and Zinc Study Group had previously forecasted a supply deficit for the year.
Zinc inventories on the London Metal Exchange stood at a mere 110,875 tonnes, representing less than three days of global consumption, thereby underscoring the constraints in physical availability. China’s accommodative monetary policy and ongoing support for domestic demand and infrastructure investment have bolstered sentiment in the industrial metals sector. Meanwhile, zinc concentrate treatment charges continued to decline, indicating a tightening in raw material availability, while Chinese port inventories of zinc concentrate experienced a significant drop during the week.
However, gains remained constrained following the announcement by Swedish miner Boliden regarding the resumption of production at its Garpenberg zinc mine, alongside a modest increase in inventories on the Shanghai exchange. From a technical perspective, the market is experiencing long liquidation, evidenced by a 5.29% decrease in open interest to 1,879 lots, alongside a price decline of Rs 2.95. Zinc is maintaining support at Rs 364.8, with potential for further decline towards Rs 362.2, while resistance is identified at Rs 371.3 and Rs 375.2 levels.