Zinc Market Steady Amid Demand Uncertainty and Tightening Global Supply

Price Updates: Zinc Prices See Mild Gains Across Global Markets

• LME Zinc opened at $2,777/MT, hitting a high of $2,785/MT and a low of $2,757/MT, currently trading around $2,763/MT.
• SHFE Zinc (August 2508 contract) opened at 22,455 yuan/MT, dipped to 22,370 yuan/MT, and peaked at 22,530 yuan/MT before closing higher at 22,495 yuan/MT, up by 35 yuan/MT or 0.16%. 
• Trading volumes increased to 96,686 lots, while open interest dropped by 3,397 lots to 140,000 lots. Bullish momentum continued amid limited inventory rise and positive macro sentiment.
• MCX Zinc opened at ₹259.80/kg, touched a high of ₹261/kg, and a low of ₹259/kg, now trading at around ₹260/kg.

Zinc Market Caught Between Weak Demand and Tightening Supply

• Demand Trends: Zinc prices edged down by 0.06% to ₹259.85/kg, driven by subdued demand and a modest rise in inventories. Stocks in Shanghai Futures Exchange (ShFE) warehouses increased by 1.8% week-on-week, signaling continued weak buying from Chinese consumers who are purchasing only to meet immediate needs. 
• China’s factory output growth hit a six-month low in May, dampening market sentiment. However, stronger-than-expected retail sales offered some optimism for downstream metal consumption. Meanwhile, the geopolitical calm from a tentative Middle East ceasefire has slightly improved risk appetite among traders.
• Supply Trends: Supply-side fundamentals remain supportive in the medium term. China’s zinc output dipped 1% month-on-month in May and recorded only marginal year-on-year growth due to maintenance shutdowns and unforeseen disruptions at major smelters. 
• On the global front, Teck Resources reported a 20% production decline at its Red Dog Mine, while Australia’s Nyrstar announced a 25% output cut for 2025 citing uncompetitive treatment charges. According to ILZSG, the global zinc surplus narrowed to 16,000 tons in April from 23,400 tons in March, pointing to tightening supply conditions.

Market News: Hindustan Zinc Strengthens Fiscal 

• Hindustan Zinc Limited, a Vedanta Group entity and India's only integrated zinc producer, reported a substantial contribution of ₹18,963 crore to the government exchequer in FY25, reflecting a 44% year-on-year increase. 
• Meanwhile, zinc prices saw marginal declines due to increased inventories and subdued demand in key markets. In the broader commodity space, crude oil and gold prices surged, while base metals, including zinc and copper, remained under pressure. 
• The zinc market outlook continues to be shaped by global supply dynamics and geopolitical developments, including a tentative ceasefire in the Middle East.

Zinc Market Under Pressure with Key Support at 258.3

• Market experts note that zinc is currently experiencing long liquidation, as reflected by a 1.87% drop in open interest to 3,717 lots. 
• Key immediate support lies at ₹258.3, with stronger support around ₹256.6. On the upside, resistance is seen near ₹261.1; if this level is breached, prices may move up to test ₹262.2 in the near term.