Zinc climbed to its highest level since June 2022 on the London Metal Exchange (LME) as warehouse stockpiles drained to multi-year lows and mine supply cuts tightened the physical market.
LME zinc for cash settlement closed at $4,107 a tonne ($1.86 a lb.) on Thursday, the highest in more than four years and up 55% from a trough of about $2,650 in mid-2025.
Stock in LME warehouses dropped from about 264,000 tonnes in December 2024 to roughly 95,000 tonnes, a 64% drawdown that has left available metal at its lowest since April 2023, Fastmarkets reported.
China awakens
However, China is finally beginning to ramp up zinc exports, according to market participants talking to Fastmarkets this week. The catalyst is tied to how imported zinc was about $720 per tonne more expensive than domestic metal in China this week, the widest disadvantage for imports since 2022.
“China has remained a net importer of refined zinc units this year, albeit at significantly weaker levels, as a combination of strong refined zinc output in China and weak domestic demand caused a build-up of inventories in China at the detriment of LME inventories,” BMO Capital Markets reported in a note on Friday.
“There are now signs that the arbitrage is strong enough to stimulate exports, with one trader interviewed by Fastmarkets suggesting that refined zinc exports could reach around 20,000 tonnes in August,” BMO said. “We expect this to weigh on LME zinc prices, which have climbed to a 4-year high of nearly $3,900 per tonne in recent months.”
Market tightness
The simultaneous decline in inventory and rise in price shows physical tightness, as the cash settlement price rises while warehouse stock declines because buyers have less to draw on.
The tightness is mostly concentrated in Western warehouses. Shanghai Futures Exchange zinc inventory has risen over the same period that LME stock has drained, Reuters reported.
HSBC’s Global Commodity Team forecasts a 2.1% year-on-year decline in 2026 to 12.5 million tonnes, due to lower production levels in Latin America.
JP Morgan expects zinc prices to stay elevated through 2026 as global supply tightens and demand rises, Investing.com reported.
Major zinc producers exposed to the LME price include Teck Resources (TSX: TECK; NYSE: TECK) with a 47% increase, Glencore (LSE: GLEN) with a 46% increase and Nexa Resources (TSX: NEXA) with a 60% increase in shares since January 2026.
Be the first to comment on "Zinc price jumps to 4-year high"