Zinc settled lower by 1.03% at Rs 422.35 as a stronger US dollar and expectations of further Federal Reserve rate hikes to contain inflation pressured prices, while supply concerns limited the downside. Nyrstar announced a strategic review of its Dutch zinc smelting operations, raising concerns over future refined zinc availability. China’s zinc production contracted for the first time in nearly a year in August, declining 1.8% year-on-year to 639,000 tonnes, marking its weakest annual performance since May 2025.

Shanghai Futures Exchange zinc inventories also fell 1.9% from the previous week, providing some support to the market. However, elevated zinc prices weakened Chinese demand and discouraged buying, while expectations of increased Chinese exports to the LME added pressure. Glencore reported own-sourced zinc production of 365,600 tonnes in the first half of 2026, down 21% year-on-year, while Boliden’s zinc concentrate production declined 16.8% quarter-on-quarter to 74,200 tonnes.

Reports of an industrial accident at Korea Zinc’s Onsan smelter further highlighted supply risks. China’s central bank reiterated its commitment to an appropriately loose monetary policy, stronger counter-cyclical adjustments and maintaining yuan stability, with sufficient liquidity to support economic activity. The global refined zinc market shifted into a 31,400-tonne deficit in June from a 22,400-tonne surplus in May, although the first six months still recorded a 120,000-tonne surplus compared with 74,000 tonnes during the same period in 2025.

Technically, the market is under fresh selling, with open interest rising 15.12% to 2,498 contracts while prices declined Rs 4.4, indicating increased participation on the downside. Zinc is currently finding support near Rs 418.5, and a break below this level could extend weakness toward Rs 414.5. On the upside, resistance is placed near Rs 429.1, while a sustained move above this level could trigger a recovery toward Rs 435.7.