Zinc prices concluded the trading session with an increase of 1.5%, reaching Rs 364.75. This rise is attributed to escalating worries regarding the constriction of global supply, prompted by a succession of production interruptions at key mining and smelting facilities. Market sentiment improved following Goldman Sachs’ indication that Boliden’s Garpenberg mine may function at a persistently lower production level for an extended duration after a seismic incident earlier this year. Further assistance was provided following Nexa Resources’ temporary halt of operations at its Cajamarquilla zinc smelter in Peru, attributed to damage from a fire. Meanwhile, Glencore-owned Kazzinc has reported a decrease in output at its facilities in Kazakhstan due to an explosion. These incidents heightened apprehensions regarding the availability of refined zinc and contributed to anticipations of a more constrained market equilibrium.

However, gains were somewhat limited by overarching macroeconomic challenges. Ongoing tensions in the Middle East, coupled with apprehensions regarding their influence on global economic growth, have constrained buying interest. A stronger U.S. dollar, bolstered by solid U.S. labour market data, also impacted sentiment negatively. In May, U.S. nonfarm payrolls rose by 172,000, surpassing expectations and bolstering the outlook for a potential Federal Reserve rate increase by the end of the year. In China, producer price inflation has accelerated for a third consecutive month, achieving its highest level since 2022.

Meanwhile, the central bank has reaffirmed its commitment to sustaining accommodative monetary policies aimed at bolstering economic growth and domestic demand. In March, the global zinc market surplus decreased to 32,700 metric tonnes, down from 58,700 metric tonnes in February, as reported by the International Lead and Zinc Study Group. Goldman Sachs projects a modest market surplus for this year, yet foresees increasingly constrained conditions after 2026 due to a slowdown in mine supply growth coupled with ongoing demand expansion.

From a technical perspective, the market is experiencing short covering, as open interest has decreased by 3.13% to 2,445 contracts, while prices have increased by Rs 5.4. Zinc has immediate support at Rs 359.4, with further downside support at Rs 354.0. Resistance is identified at Rs 367.8, and a consistent movement above this threshold may lead to further increases toward Rs 370.8.