Zinc prices dropped 0.89% to settle at Rs 405.80 today. The main reason? Traders expect Chinese mines to ramp up output again. A better flow of zinc concentrate in the market is helping cool down recent supply worries.
Still, the price did not crash completely. There are still real supply issues outside China that keep a floor under the market. In the physical spot market, tight conditions showed up clearly on the London Metal Exchange. The cash premium over the three-month contract jumped sharply to $106 per tonne, up from $45 just last week. Over in China, Shanghai Futures Exchange zinc stocks dropped 1.6% compared to the previous week.
Chinese smelters produced less refined zinc in September, falling 1.9% from August and down 6.4% from a year earlier. But analysts expect mine output in China to pick up during October as mines that faced disruptions get back to work. Across Western countries, refined zinc output fell 3.4% in the first half of 2026 because of expensive power bills and a shortage of raw feed. People are also keeping a close eye on Nyrstar’s Budel smelter in the Netherlands, where uncertainty is adding extra nervousness to the market.
Fresh numbers from the International Lead and Zinc Study Group (ILZSG) show the world refined market swung into a deficit of 3,900 tonnes in August. That comes right after a surplus of 27,500 tonnes in July. Looking at the first eight months of the year, the total surplus shrunk to 96,000 tonnes, down from 133,000 tonnes during the same months last year.
Looking ahead, the ILZSG expects the global market to show a surplus of 25,000 tonnes in 2027, flipping from an estimated deficit of 88,000 tonnes in 2026. Refined metal output should rise 2% to 14.21 million tonnes, while mined supply is projected to jump 3% to 12.78 million tonnes. World demand will likely grow 1.2% to 14.19 million tonnes in 2027, driven by steady factory use in Europe, India, and the United States. However, China’s weak real estate sector could hold back bigger demand gains. Notably, China cut its refined zinc imports by 79% to just 38,000 tonnes in the first half of the year, showing the country is making much more of its own metal.
On the charts, traders are cutting back on bullish bets. Zinc saw clear long unwinding as open interest fell 5.03% to 2,077 contracts while the price shed Rs 3.65. Right now, zinc has immediate support at Rs 403.50. If it breaks below that, prices could slide down to Rs 401. On the upside, Rs 410 acts as the first key resistance, and a clean push above it could open the doors toward Rs 414.50.
Key Takeaways for Zinc Traders and Industrial Buyers
- Short-Term Pullback: Prices are sliding as traders square off long positions, waiting to see how quickly Chinese mines restart.
- Spot Market Remains Tight: The big jump in the LME cash premium proves that nearby supply is still thin on the ground.
- Critical Levels to Watch: Keep an eye on Rs 403.50 as key support. A break below that opens the door to Rs 401, while buyers need a close above Rs 410 to regain momentum.