Zinc settled 1.4% lower at Rs 410.6, influenced by expectations of increased refined production from Japan’s Mitsui Kinzoku, which intends to produce 117,700 tonnes of refined zinc in the second half of fiscal 2026, reflecting a 32% year-on-year increase. Sentiment was influenced by weaker Chinese economic indicators, as industrial profits increased by 15.7% in the first eight months of 2026, a decline from 17.6% during January-July, with subdued domestic demand counterbalancing the strength in high-tech and AI-related manufacturing. Chinese factory activity experienced a rebound in September, as evidenced by the official manufacturing PMI, which increased to 50.1 from 49.8. Concurrently, the private RatingDog PMI also saw an uptick, rising to 52.1 from 51.5, marking a five-month peak.
Supply concerns offered a degree of support as Nyrstar initiated a strategic review of its Dutch zinc smelting operations. Concurrently, China’s zinc output experienced a year-on-year decline of 1.8%, totalling 639,000 tonnes in August, which represents its weakest annual performance since May 2025. Inventories of zinc at the Shanghai Futures Exchange experienced a decrease of 1.8% compared to the prior week. Meanwhile, expectations of heightened Chinese exports to the LME and a decline in copper contributed to downward pressure on prices. The global refined zinc market experienced a slight surplus of 13,000 tonnes in July, as refined supply reached 1.190 million tonnes, surpassing demand of 1.177 million tonnes.
Global zinc demand experienced an uptick of 0.56%, representing its initial growth following three successive months of decline, whereas refined output saw a modest increase of 0.3%. China continued to hold the position of the largest refined zinc producer, with an output of approximately 629,000 tonnes. On the mining front, global zinc mine production experienced an 8% year-on-year decrease, totalling approximately 995,000 tonnes. This decline represents the fifth consecutive monthly drop and the most significant contraction since May 2024.
Technically, the market is experiencing renewed selling pressure, as evidenced by a 7.49% increase in open interest to 2,669, alongside a price decline of Rs 5.85. Zinc is currently encountering support around Rs 406.7, and a decline beneath this threshold may reveal Rs 402.8. On the upside, resistance is positioned around Rs 416.1, and a sustained movement above this threshold could propel prices toward Rs 421.6.
