Zinc prices settled 0.37% higher at Rs 383.9, buoyed by constricting near-term supply conditions and a resurgence in manufacturing sentiment across key economies. China’s GDP growth has decelerated to a three-and-a-half-year low due to subdued domestic demand. However, manufacturing data from China, Europe, and the United States has shown resilience in the face of rising input costs, thereby offering support to industrial metals. Meanwhile, zinc inventories in Shanghai Futures Exchange warehouses decreased by 0.8% from the previous week, indicating robust physical demand and constrained exchange supplies.
On the supply side, production disruptions persisted in influencing market sentiment. Glencore’s Kazzinc operation in Kazakhstan is currently operating at diminished capacity due to an explosion, whereas Nexa’s Cajamarquilla smelter in Peru is in the process of gradually resuming operations following a shutdown related to a fire. Concerns persist regarding diminished output from Boliden’s Garpenberg mine in the wake of a seismic event that occurred earlier this year. Despite these disruptions, China’s zinc production rose by 9.4% year-on-year in May, underscoring the country’s growing refining capacity.
As reported by the International Lead and Zinc Study Group, the global refined zinc market surplus experienced a significant contraction, decreasing to 8,700 tonnes in May from 43,400 tonnes in April. Nonetheless, the market maintained a cumulative surplus of 163,000 tonnes over the initial five months of the year. Goldman Sachs anticipates a slight surplus in 2026, driven by an increase in mine supply. However, it projects that conditions will tighten after 2027 as the growth in mine supply decelerates while demand continues to rise.
Technically, zinc is experiencing short covering, as evidenced by a 6.62% decline in open interest alongside an increase in prices. Immediate support is positioned at Rs 381.2, succeeded by Rs 378.4. Resistance is identified at Rs 385.9, and a sustained movement above this threshold may lead to further gains towards Rs 387.8. The overall near-term outlook remains cautiously positive, bolstered by tightening supply and enhancing industrial demand.