Commodity Radar: Zinc shines as a lucrative bet on strong fundamentals, but technicals suggest consolidation. What should traders do?

Zinc prices have extended their recent rally, driven by tightening global supply and supportive macro trends, as production curbs at key smelters, particularly in China, have strengthened bullish sentiment. Declining inventories at the London Metal Exchange (LME) and a weaker US dollar have further supported the upward move.

The fundamentals remain strong, though technical indicators suggest that the metal could enter a near-term consolidation phase after the sharp run-up.

The May zinc futures jumped 1% on Tuesday, reaching the day's high of Rs 345.65 on the MCX. The move was supported by a weak rupee, which stayed below the 95 mark against the dollar.


Commenting on the current trends, Ajit Mishra, Senior Vice President, Research at Religare Broking, said Zinc prices have been on a significant upward trajectory recently, hitting levels near the 355 mark on MCX. This rally is being driven by the tightening supply and shifting macroeconomic sentiment, he said.

“The most immediate driver for the May 2026 rally is a reduction in refined zinc output. Several major smelters (particularly in China) have entered scheduled maintenance in May, reducing the immediate supply of zinc ingots. The ore availability has slightly improved compared to previous years, but the high energy costs in some regions have kept smelter profit margins tight, ultimately leading to strategic production curtailments rather than full-capacity runs,” Mishra said.

Mishra said the fundamentals remain strong on the back of falling global inventories, including those in the LME warehouses.

While a weakening dollar remains supportive for dollar-linked commodities, MCX prices remain firm on a weak rupee, Mishra said.

Technical outlook

Decoding the chart, the Religare analyst said the weekly chart shows a strong long-term uptrend, but the most recent price action suggests that we are entering a consolidation or cooling-off phase after a significant rally.

“MCX Zinc is trading above all major EMAs (9, 18, 27, 50, and 100). The 9-week EMA (334.60) is currently the primary support level,” he added.

Zinc futures: Trading strategy on MCX

As long as the price stays above 335, the structural bull trend remains intact. The 338.50-339.50 is the "value zone" where short-term buyers usually step back in. Placing stop loss below the 9-week EMA of 335, maintain buy on dips for target objectives of 350-354.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)