Zinc prices witnessed strong bid in the latest session, jumping 3.03% to close at Rs. 412.65 per kg. This is the sharpest single day rise of the rupee. 12.15. The surge came as global inventories continued to decline, electricity bills for smelters remained stubbornly high and raw metal supplies remained tight at major hubs.
Global markets went into losses
Data from the International Lead and Zinc Study Group (ILZSG) showed global refined zinc balances fell to a deficit of 3,900 tonnes in August. This is in sharp contrast to the surplus of 27,500 tonnes seen in July.
Meanwhile, physical inventories are declining rapidly. On the Shanghai Futures Exchange, zinc stockpiles fell 5% week-on-week to 137,139 tonnes, the lowest volume since March. On the London Metal Exchange (LME), on-warrant zinc stocks stood at 133,700 tonnes. Spot cash contracts on the LME were trading about $80 a tonne above the three-month forward price, a classic backwardation signal that shows buyers need the physical metal right now.
Smelters grapple with skyrocketing power costs
Western smelters are feeling the pinch. Refined zinc production in the West fell 3.4% year-on-year in the first half of 2026 due to expensive power and a shortage of zinc concentrate. In Europe, traders are jittery over Nairstar's loss-making Budel facility in the Netherlands, which is facing ongoing feasibility issues.
China is also producing less. Its domestic refined zinc production fell 1.9% month-on-month and 6.4% compared with September last year.
Headwinds and Long-Term Balance
Despite the current pressure, zinc prices face headwinds ahead. Chinese mine production is expected to increase gradually, which will bring greater focus to the market and potentially prevent sharp increases in prices.
Looking at the broader year, the global market had a surplus of 96,000 tonnes during the first eight months of 2026, down from a surplus of 133,000 tonnes recorded in the same period last year. For 2026 overall, ILZSG estimates a total reduction of 88,000 tonnes. However, the group expects the balance to return to a 25,000 tonne surplus in 2027 as global refined output rose 2% to 14.21 million tonnes and mine output rose 3% to 12.78 million tonnes.
अमेरिका, यूरोप और भारत में स्थिर फैक्ट्री खपत के कारण वैश्विक मांग 2027 में 1.2% बढ़कर 14.19 मिलियन टन होने की राह पर है, भले ही सुस्त चीनी संपत्ति क्षेत्र तेजी से विकास को रोक रहा है।
Technical Outlook for Zinc
On the charts, fresh long positions are being seen in Zinc. Open interest rose 7.03% to 1,461 contracts, while the price climbed Rs. 12.15.
From a trading perspective, Zinc finds its immediate destination near Rs. 403.00, with deep safety net at Rs. 394.00. On the contrary, Rs. 418.50 is a key resistance level to watch. A clear breakout above Rs. This may push the prices towards Rs 418.50. 424.50. On the other hand, it is slipping below Rs. Could lead to sharp decline towards Rs 403.00. 394.00.
Key points for zinc traders and industrial buyers
- Immediate Agile Supply:Declining warehouse stocks in Shanghai and London, coupled with an $80 cash premium, point to strong short-term price support.
- View key levels:The momentum remains positive till Rs. Hold 403.00, Bulls target Rs. 418.50 and Rs. 424.50.
- Long Term Caution:Increased mine output and higher smelter output in 2027 mean ongoing deficits could soon lead to an oversupplied market.