Zinc settled 0.27% lower at Rs 423.1 as expectations of a global refined zinc surplus in 2027 weighed on sentiment; however, immediate supply tightness and declining Chinese inventories limited losses. LME cash contracts traded at a premium to three-month contracts, indicating tightness in near-term availability. Meanwhile, zinc inventories monitored by the Shanghai Futures Exchange decreased by 1.5% from the previous Friday, thereby alleviating the stock overhang in China, the largest consumer globally. In September 2026, China’s refined zinc production experienced a decline of 1.9% compared to the previous month and a more significant drop of 6.4% year on year. Concurrently, Western refined zinc production saw a year-on-year decrease of 3.4% in the first half of 2026, influenced by high energy costs and restricted access to raw materials.
Additional supply risks have surfaced following Nyrstar’s decision to conduct a strategic review of its unprofitable Budel smelter located in the Netherlands. However, expectations of increased Chinese zinc concentrate availability could alleviate supply constraints, as domestic mine output is anticipated to rebound in October following the resumption of operations that were interrupted by accidents and safety inspections. Japan’s Mitsui Kinzoku intends to manufacture 117,700 tonnes of refined zinc in the latter half of fiscal 2026, reflecting a 32% increase compared to the previous year, which may contribute to the overall global supply.
As reported by the International Lead and Zinc Study Group, the global refined zinc market is anticipated to transition from a deficit of 88,000 tonnes in 2026 to a surplus of 25,000 tonnes in 2027. Global refined zinc production is projected to grow by 2%, reaching 14.21 million tonnes by 2027, whereas mine production is anticipated to increase by 3%, totalling 12.78 million tonnes. Demand is anticipated to increase by 1.2%, reaching 14.19 million tonnes, bolstered by consumption patterns in Europe, India, and the United States. However, Chinese demand growth is anticipated to decelerate to 0.3% from 1.8% in 2026, attributed to diminished real estate investment.
China’s net imports of refined zinc fell sharply by 79% year on year to 38,000 tonnes in the first half of the year, indicative of enhanced domestic smelting capacity and a trend toward greater self-sufficiency. Technically, zinc is experiencing a long unwinding phase, as evidenced by a 4.34% decrease in open interest to 1,741 contracts, accompanied by a price decline of Rs 1.15. Support is established at Rs 420, with an additional level at Rs 417. Resistance is identified at Rs 426, beyond which prices may approach Rs 429.50.
