Zinc Prices Hold Firm Above $3,000/MT Amid Falling Inventories and Chinese Supply Strength

Key Highlights

• LME Zinc: Closed at $3,009.65/MT (range: $2,958–$3,030).
• SHFE Zinc: Firm at ¥22,000–¥22,500/MT.
• MCX Zinc: Around ₹295/kg, with strong intraday volatility.
• HZL Price Hike: +₹6,900/tonne for zinc; +₹2,600/tonne for lead.
• Vedanta Output: Record Q2 production across zinc, aluminum, and alumina.

Price Overview: Stability Amid Tight Inventories

• Zinc prices remained steady across major exchanges, supported by tightening inventories and active speculative interest. 
• LME: Three-month zinc futures closed at US $3,009.65/MT, after trading between $2,958–$3,030/MT during the session.
• SHFE: Shanghai zinc futures traded firm in the ¥22,000–¥22,500/MT range, reflecting steady domestic demand and reduced ingot inventories.
• MCX: Domestic zinc prices strengthened to around ₹295/kg, with near-term contracts showing higher intraday movement depending on expiry.

Supply & Demand Dynamics: Inventory Drawdown Continues

Inventory: LME on-warrant stocks continued their downward trend, hovering between 39,350–40,500 tons, marking sustained inventory drawdowns.

Market Activity: Elevated volatility persisted due to warehouse withdrawals and shifting treatment charges. Traders also highlighted improved Chinese refined output as a key balancing factor.

China: Tightening zinc ingot inventories through late September and early October lent near-term support to futures.

Market Developments: Producers Report Record Output

• Hindustan Zinc Limited (HZL), the world’s leading integrated zinc producer, achieved its highest-ever mined metal production of 523,000 tonnes during the first half of FY26, marking a record second-quarter output. The strong performance reflects operational efficiency and improved ore grades across its mining sites.
• HZL announced a price hike of ₹6,900/tonne ($78/ton) for zinc ingots and ₹2,600/tonne ($29/ton) for lead ingots, compared to 2 October 2025. The revision follows strengthening global zinc prices and firm domestic demand supported by falling LME inventories.
• Global zinc markets continue to face a growing imbalance between China and Western economies, as visible LME inventories remain at multi-month lows. Industry sources highlight ongoing warehouse withdrawals and limited Western smelter output, underscoring a tight near-term supply outlook.
• Vedanta Limited delivered record quarterly production in Q2 FY26, driven by strong performance across its aluminum, alumina, and zinc divisions.
• Aluminum: 617,000 tonnes (highest ever quarterly output)
• Alumina: 653,000 tonnes (record production)
• Zinc India (HZL): Mined metal output of 258,000 tonnes, up 1% YoY, contributing to a record H1 output of 523,000 tonnes.
  The results underline Vedanta’s operational strength and sustained production momentum across its asset base.
• Amid repeated delays in Vedanta’s demerger timeline, the company’s stock gained traction following record silver price rallies in India. Analysts cite Hindustan Zinc’s performance and the broader uptrend in precious metal prices as key drivers for renewed investor optimism in Vedanta shares.

Market Outlook: Mildly Bullish but Capped Upside

Support: ₹290.0/kg
Resistance: ₹300.0/kg
Breakout Level: Above ₹305.0/kg

• With LME futures holding above $3,000/MT and inventories low, prices may retain short-term strength. However, upside potential appears limited unless new supply disruptions emerge.
• Market participants should monitor Chinese SHFE spreads for confirmation of broader strength and directional cues.