Zinc prices gained momentum on September 21, 2026, as supply tightening drove market sentiment higher. Zinc prices settled 1.26% higher at ₹433.05, supported by a significant contraction in Chinese zinc production during August 2026, marking the first year-on-year decline in nearly twelve months, according to analysis from Kedia Advisory published on Investing.com. Chinese zinc production declined 1.8% year-on-year to 639,000 tonnes in August, as the world's largest zinc producer faced multiple headwinds.
The output decline was pressured by planned smelter maintenance, mining disruptions, negative spot treatment charges reflecting concentrate scarcity, and elevated domestic inventory levels. This production contraction represents a notable shift in the trajectory of Chinese supply, which had been expanding consistently throughout the previous year. The supply-side dynamics are being reinforced by additional constraints in the global market.
The LME cash premium over three-month zinc futures remained elevated at $124 per tonne, reflecting tight availability outside China. Shanghai Futures Exchange zinc inventories showed modest growth of 0.6% from the previous week. More significantly, LME inventories remain at historically low levels, while sharply reduced smelter treatment charges underscore constrained concentrate availability, a key input for zinc refining.
Major production disruptions at key mining assets have compounded supply concerns. The Antamina mine in Peru and the Red Dog operation in Alaska, both significant contributors to global zinc concentrate supplies, have experienced operational disruptions. Additionally, Middle East geopolitical tensions have restricted shipments of Iranian ore, further limiting global supply options.
Production data from major zinc producers reflects the broader supply tightness. Nexa Resources reported second-quarter zinc production of 79.3 thousand tonnes, representing 8% growth year-on-year. Minmetals Resources produced 105,800 tonnes in the period and maintained its annual guidance of 215,000-235,000 tonnes.
However, Glencore's first-half own-sourced zinc output declined sharply by 21% year-on-year to 365,600 tonnes. Boliden reported zinc concentrate production contracted 16.8% quarter-on-quarter to 74,200 tonnes. The global refined zinc market balance shifted notably, moving into a 31,400-tonne deficit in June from a 22,400-tonne surplus in May.
However, year-to-date figures indicate broader market stability, with the first-half 2026 market recording a 120,000-tonne surplus compared with 74,000 tonnes in the same period of 2025. Price gains were tempered by countervailing factors, however. Stronger US dollar expectations and prospects of further Federal Reserve monetary tightening weighed on sentiment, as a firmer dollar typically pressures commodities priced in the currency.
Additionally, potential Chinese zinc exports to LME warehouses created headwinds to higher prices. Elevated zinc prices themselves contributed to demand weakness, as the elevated cost prompted caution among Chinese buyers. From a technical perspective, zinc exhibited characteristics of position unwinding.
Open interest declined 9.97% to 2,022 contracts while prices gained ₹5.4, indicating short covering activity. Support levels are positioned at ₹424.3, with a break below that level potentially testing ₹415.5. Resistance is placed at ₹438.3, and a sustained move above this level could push prices toward ₹443.5.
Source: in.investing.com