Zinc prices decreased by 0.88% to close at Rs 367.5, reflecting apprehensions regarding the global economic outlook in light of persistent geopolitical tensions in the Middle East. Ongoing U.S. military activities in southern Iran, coupled with ambiguity regarding peace talks, have heightened market apprehension concerning inflationary pressures and their possible effects on industrial demand. However, the downside remained constrained due to the tightening of global supply conditions, which were influenced by various production disruptions in critical zinc-producing areas.
Support for zinc prices has been bolstered by the temporary suspension of operations at Nexa Resources’ Cajamarquilla zinc smelter in Peru, which is the largest zinc smelter in Latin America, due to a fire that caused damage to processing infrastructure. Additional supply concerns emerged following the report from Glencore-owned Kazzinc, which indicated a reduction in operating capacity at its zinc and lead plants in Kazakhstan due to a recent explosion. Prior to these disruptions, the International Lead and Zinc Study Group had anticipated a 19,000-ton shortfall in the refined zinc market for the current year.
LME zinc inventories stood at a critically low level of 111,250 tonnes, which corresponds to less than three days of global consumption, underscoring the tight conditions in the physical market. However, gains were limited by anticipations of enhanced supply from alternative producers. Swedish miner Boliden has confirmed that production at its Garpenberg zinc mine is anticipated to resume in the second quarter. Meanwhile, Japan’s Mitsui Mining and Smelting intends to boost refined zinc production by 3.2% in the first half of fiscal year 2026-27. Inventories at the Shanghai Futures Exchange increased by 1.5% over the week, suggesting a modest enhancement in the supply conditions within China.
The International Lead and Zinc Study Group reported that the global zinc market surplus narrowed to 32,700 tonnes in March from 58,700 tonnes in February. Technically, the market is experiencing renewed selling pressure, evidenced by a 23.59% increase in open interest, reaching 2,211 lots. Zinc is maintaining support levels at Rs 365.7 and Rs 363.8, with resistance identified at Rs 370.6 and subsequently at Rs 373.6.