Zinc settled 0.56% higher at Rs 395.55, bolstered by constrained mine supply, diminishing overseas inventories, and robust LME calendar spreads, which persistently indicate short-term market tightness. LME zinc inventories decreased to 95,000 tonnes, with cancelled warrants holding steady at a quarterly high, while on-warrant stocks dipped below critical thresholds, heightening the risk of a possible supply squeeze. The LME cash zinc contract persisted at approximately $60 per tonne above the three-month forward contract, a decline from over $73 the previous week, yet it continues to exhibit significant backwardation.

Minmetals Resources announced zinc production figures of 105,800 tonnes and maintained its full-year production guidance within the range of 215,000 to 235,000 tonnes. Supply disruptions continue to pose a significant concern, as a mine in Southwest China is anticipated to decrease zinc concentrate production by roughly 1,000 tonnes of contained zinc in August. Concurrently, a smelter in Central China is scheduled for approximately two weeks of maintenance, which could lead to a reduction in output by 1,000 to 1,500 tonnes. Glencore reported first-half own-sourced zinc production of 365,600 tonnes, reflecting a 21% decline year-on-year, while upholding its 2026 guidance of 700,000-740,000 tonnes.

Boliden’s zinc concentrate production experienced a quarter-on-quarter decline of 16.8%, totalling 74,200 tonnes, whereas MMG reported a production of 55,500 tonnes in the second quarter. In contrast, Mitsui Mining and Smelting anticipates refined zinc production of 108,200 tonnes in the first half of fiscal 2026/27, reflecting a year-on-year increase of 3.2%. The global refined zinc surplus contracted significantly to 8,700 tonnes in May, down from 43,400 tonnes in April. However, the surplus for the January-May period totalled 163,000 tonnes, in contrast to 44,000 tonnes during the same timeframe the previous year. China’s refined zinc output increased by 10% year-on-year to 641,000 tonnes in May, underscoring strong smelter activity.

Technically, the market is experiencing new buying activity, as open interest has risen by 3.47% to 2,806 contracts, while prices have increased by Rs 2.2. Zinc has support at Rs 393.3, followed by Rs 390.9, while resistance is placed at Rs 398.4. A sustained move above Rs 398.4 could extend gains toward Rs 401.1, while tight inventories and mine supply concerns may continue to support the near-term outlook.