Zinc prices declined by 1% to settle at Rs 366.2, reflecting market sentiment influenced by concerns over weakening demand in China. Recent economic indicators from China revealed a 0.6% contraction in retail sales for May, representing the first decline in over three years. Additionally, fixed-asset investment decreased by 4.1% in the initial five months of the year, falling notably short of market forecasts. These indicators have prompted apprehensions regarding the robustness of industrial and construction demand in the world’s foremost metals consumer.

Industrial production increased by 4.5% year-on-year in May, surpassing forecasts and offering a degree of support to the overall metals market. Despite the subdued demand outlook, losses in zinc were constrained by increasingly stringent supply conditions. Several recent supply disruptions have intensified worries regarding the availability of refined zinc. Nexa Resources has temporarily suspended operations at its Cajamarquilla smelter in Peru due to a fire that caused damage to the processing infrastructure. Additionally, Kazzinc, which is owned by Glencore, has maintained operations at a diminished capacity following an explosion that impacted its zinc and lead facilities in Kazakhstan.

These incidents occurred concurrently with the International Lead and Zinc Study Group’s projections of a refined zinc market deficit for the year. Additional backing was provided by diminished inventories and persistent challenges in mine supply. However, gains remained constrained by anticipations of increased output from various producers. Sweden’s Boliden intends to recommence operations at its Garpenberg mine in the second quarter, whereas Japan’s Mitsui Mining and Smelting anticipates a 3.2% rise in refined zinc production during the first half of the 2026/27 financial year.

Meanwhile, global zinc market data indicated that the surplus narrowed significantly in March, suggesting an improving market balance. Technically, the market is experiencing long liquidation, as evidenced by a 7.16% decline in open interest alongside a decrease in prices. Zinc has immediate support at Rs 364.0, followed by Rs 361.9. Resistance is identified at Rs 369.4, and an upward movement beyond this threshold may lead to further increases toward Rs 372.7.