Zinc has benefited from tight near-term supplies due to declining inventories and higher power costs
Zinc closed 1.55% higher at Rs 419.05 due to falling stocks, higher electricity bills and tight short-term supply picture.
Shanghai Futures Exchange holdings slipped 5% week-on-week to 137,139 tonnes – the lowest since March – while LME stocks stood at 133,700 tonnes.
The LME cash zinc contract trades about $80 per tonne above the three‑month forward, a clear sign of immediate tightness.
Supply concerns grew after Western refined zinc production fell 3.4% year on year in the first half of 2026 due to rising energy costs and limited raw materials.
Adding to the risks, Nairastar is still reviewing its loss-making Budel smelter in the Netherlands.
In China, refined zinc production fell 1.9% month-on-month and 6.4% year-on-year in September, although a rebound in mine output and improved concentrate supply may slow the decline.
The International Lead and Zinc Study Group says the global refined zinc market fell to a deficit of 3,900 tonnes in August after a surplus of 27,500 tonnes in July.
Yet the group noted a surplus of 96,000 tonnes for the first eight months of 2026, down from 133,000 tonnes a year earlier.
ILZSG estimates the market will grow from a deficit of 88,000 tonnes in 2026 to a surplus of 25,000 tonnes in 2027, with production increasing by 2% to 14.21 million tonnes.
Demand will grow 1.2% to 14.19 million tonnes in 2027, led by Europe, India and the US, while weak Chinese demand due to a soft asset market could curb growth.
technical snapshot
On the technical side, open interest jumped 10.75% to 1,618 contracts and prices rose by Rs 6.4. Zinc finds support at Rs.412.50 and Rs.406.00, while resistance lies at Rs.422.50. A clear break above Rs 422.50 could send the price towards Rs 426.00; A fall below Rs 412.50 could push it towards Rs 406.00.
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Key Points for Zinc Traders
- Zinc price rose 1.55% as inventories dwindled and power costs remained high.
- Shanghai stocks are at their lowest since March; LME stocks remain modest.
- Immediate supply is tight, reflected in the $80/tonne premium over the next three months.
- Western output fell 3.4% annually; Sugar production declined in September, adding to the pressure.
- ILZSG expects a shift from deficit to surplus by 2027 with demand growth led by Europe, India and the US.
- Technical Levels: Support at Rs.412.50/406.00, Resistance at Rs.422.50; Breakouts could take the price to Rs.426.00 or down to Rs.406.00.