Zinc settled 0.27% higher at Rs 414.85, supported by growing concerns over supply constraints. However, the extent of the gains was curtailed as renewed hostilities in the Middle East led to a rise in oil prices, thereby reigniting inflationary pressures. LME zinc cancelled warrants reached 30,875 tonnes, marking the highest level in over a year, while 9,975 tonnes of deliveries into LME warehouses alleviated immediate supply tightness. The three-month zinc backwardation has contracted to $85 from over $200 in late August, while on-warrant inventories currently total 80,225 tonnes.

Global mine supply continues to encounter difficulties, with Glencore, Boliden, and MMG all reporting reductions in output. Glencore’s own-sourced zinc output experienced a decline of 21% year-on-year in the first half of 2026, amounting to 365,600 tonnes. In contrast, Boliden’s zinc concentrate production experienced a quarter-on-quarter decrease of 16.8%, totalling 74,200 tonnes. MMG produced 106,000 tonnes in the first half, which accounts for 48% of its full-year guidance of 215,000-235,000 tonnes. Nexa reported Q2 zinc production of 79.3 thousand tonnes, reflecting an 8% increase year-on-year, primarily attributed to improved ore grades.

In contrast, Minmetals Resources reported a production of 105,800 tonnes while upholding its full-year guidance. Elevated zinc prices have been observed; however, a noticeable weakening of demand is discouraging buyers in China. The global refined zinc market experienced a shift into a deficit of 31,400 tonnes in June, contrasting with a surplus of 22,400 tonnes recorded in May. Nevertheless, the first half of the year still exhibited a surplus of 120,000 tonnes, in contrast to 74,000 tonnes during the same period the previous year.

Technically, zinc is witnessing an uptick in buying activity, evidenced by a 3.97% increase in open interest to 2,698, alongside a price rise of Rs 1.1, indicating fresh long participation. Prices are sustaining their stance above the immediate support level of Rs 412.1. A breach of this threshold may result in a downward movement toward Rs 409.2. On the upside, resistance is positioned at Rs 417.4, and a decisive move above this level could extend the upside toward Rs 419.8. Overall, the near-term bias remains optimistic, supported by constricting supply and a deficit observed in June. However, elevated prices and inflationary pressures may constrain further progress.