Zinc settled 1.8% higher at Rs 427.65 following reports of an industrial accident at Korea Zinc’s Onsan smelter, which raised concerns regarding near-term supply. Additionally, tight inventories outside China offered further support. The LME cash zinc contract premium over the three-month contract persisted at a high level of $124 per tonne, indicative of limited physical availability. Production disruptions at various mines, particularly in China, have heightened worries regarding the availability of concentrate, while tensions in the Middle East have limited shipments of Iranian ore.

Major mines such as Antamina in Peru and Red Dog in Alaska are currently facing reduced output as they navigate through sections of lower-grade ore. Significantly reduced smelter treatment charges further suggest a constrained availability of concentrate. However, the potential for upside remained constrained by a robust US dollar, anticipations of additional tightening by the Federal Reserve, and apprehensions regarding the rise in Chinese exports to LME warehouses. Elevated zinc prices have concurrently dampened demand and prompted Chinese buyers to exercise caution. On the supply side, Nexa reported second-quarter zinc production of 79.3 thousand tonnes, reflecting an 8% increase year-on-year, bolstered by improved ore grades.

Meanwhile, Minmetals Resources produced 105,800 tonnes and maintained its full-year guidance of 215,000–235,000 tonnes. Glencore reported first-half own-sourced zinc production of 365,600 tonnes, reflecting a 21% decline year-on-year. However, the company has upheld its guidance for 2026, projecting production levels between 700,000 and 740,000 tonnes. Boliden’s zinc concentrate production experienced a decline of 16.8% quarter-on-quarter, totalling 74,200 tonnes, whereas MMG reported a production of 106,000 tonnes in the first half. The global refined zinc market transitioned to a deficit of 31,400 tonnes in June, a shift from the 22,400-tonne surplus recorded in May.

Nevertheless, the market for the first half of the year maintained a surplus of 120,000 tonnes, in contrast to the 74,000 tonnes observed during the corresponding period last year. Technically, zinc is experiencing new buying activity, as open interest has increased by 2.79% to 2,246, while prices have risen by Rs 7.55. Support is positioned at Rs 421.4, and a decline beneath this threshold may reveal Rs 415, whereas resistance is identified at Rs 431.3; a persistent advance beyond this point could propel prices toward Rs 434.8.