Zinc futures demonstrated strong momentum on Tuesday, with May zinc futures jumping 1% to reach the day's high of ₹345.65 on MCX. According to reports from The Economic Times, the rally was primarily driven by tightening global supply conditions and supportive macroeconomic trends. The upward movement was further supported by a weaker US dollar, which remained supportive for dollar-linked commodities, while the Indian rupee stayed below the 95 mark against the dollar. As per The Economic Times, Zinc prices have been on a significant upward trajectory recently, hitting levels near the 355 mark on MCX, with the current rally being driven by tightening supply and shifting macroeconomic sentiment.
The primary driver behind the current rally has been reduced refined zinc output from major smelters, particularly in China, which entered scheduled maintenance in May. As reported by The Economic Times, Ajit Mishra, Senior Vice President, Research at Religare Broking, explained that while ore availability has slightly improved compared to previous years, high energy costs in some regions have kept smelter profit margins tight, ultimately leading to strategic production curtailments rather than full-capacity operations. The most immediate driver for the May 2026 rally is a reduction in refined zinc output, with several major smelters (particularly in China) having entered scheduled maintenance in May, reducing the immediate supply of zinc ingots.
The fundamentals remain robust, with declining inventories at the London Metal Exchange (LME) providing additional support for zinc prices. According to Mishra's analysis reported by The Economic Times, falling global inventories, including those in LME warehouses, continue to strengthen the bullish sentiment in the zinc market. The combination of reduced supply from key producing regions and improving ore availability has created a favorable supply-demand dynamic for the metal. While a weakening dollar remains supportive for dollar-linked commodities, MCX prices remain firm on a weak rupee, as noted by Mishra.
Despite the strong fundamentals, technical indicators suggest the metal could enter a near-term consolidation phase after the sharp run-up. As reported by The Economic Times, MCX Zinc is trading above all major EMAs (9, 18, 27, 50, and 100) with the 9-week EMA at 334.60 currently serving as the primary support level. Analysts maintain a buy-on-dips strategy above key support levels with upside targets near 350–354 levels, indicating cautious optimism for the metal's continued performance. The technical setup shows the metal trading above all major exponential moving averages, with the 9-week EMA providing crucial support for potential further upside movements.
