Zinc prices settled down 0.39% at Rs 434.1, influenced by elevated prices that weakened demand and discouraged buying in China. Additionally, expectations of increased Chinese export deliveries to the LME contributed to the downward pressure. The decline was also influenced by a sharp pullback in copper amid changing tariff expectations, which weighed on the broader base metals complex. China’s zinc production experienced a contraction for the first time in almost a year in August, with a year-on-year decline of 1.8% to 639,000 tonnes, as reported by the National Bureau of Statistics. This marks the weakest annual performance since May 2025.

The Shanghai Futures Exchange reported a 0.6% increase in zinc inventories compared to the previous Friday. Concurrently, the rise in Chinese exports may enhance supply availability in other significant markets. Supply concerns persisted beyond China, as Glencore disclosed its own-sourced zinc production at 365,600 tonnes for the first half of 2026, reflecting a decrease of 99,600 tonnes or 21% compared to the previous year. Meanwhile, Boliden reported a quarter-on-quarter decline of 16.8% in zinc concentrate production, totalling 74,200 tonnes. Reports of an industrial accident at Korea Zinc’s Onsan smelter have heightened concerns regarding potential supply disruptions.

Tight inventories outside China have sustained the LME cash zinc premium over the three-month contract at $124 per tonne. Additionally, disruptions at various mines and limited Iranian ore shipments, stemming from tensions in the Middle East, have exacerbated concerns regarding concentrate availability. The global refined zinc market transitioned into a deficit of 31,400 tonnes in June, a shift from the surplus of 22,400 tonnes observed in May. Nevertheless, the first half of 2026 still registered a surplus of 120,000 tonnes, in contrast to the 74,000 tonnes recorded during the equivalent timeframe in 2025.

Technically, the market continues to experience long liquidation, as evidenced by a 12.14% decrease in open interest to 1,570 contracts, coinciding with a Rs 1.7 decline in prices. Zinc is currently finding support at Rs 431.9, and a sustained breach below this level may lead to a test of Rs 429.6. On the upside, resistance is positioned at Rs 437.3, and a decisive move above this level could propel prices toward Rs 440.4.