Zinc Futures Fall as China Holds Back Stimulus

Zinc futures fell below $3,300 per tonne, retreating from a near three-week high, as uncertainty over the duration of the Middle East conflict clouded the demand outlook. President Donald Trump said the US will strike Iran “extremely hard” in the next two to three weeks, potentially targeting civilian infrastructure if negotiations fail, even as he signaled the war is “very close” to completion. However, losses were limited by signs of improving industrial activity and short-term supply tightness. China's factory activity returned to expansion in March, supporting demand prospects for base metals. Inventories at the Shanghai Futures Exchange declined 2.3% over the past week, while other supply constraints, including low stockpiles and disruptions caused by mine closures and operational delays, further supported prices. Meanwhile, the restart of Boliden’s Tara mine and the production ramp-up at Ivanhoe Mines’ Kipushi project are expected to keep the market in a small surplus.

Zinc futures rose past $3,300 per tonne, hitting their highest level in nearly three weeks, as improving industrial activity and tightening supply conditions provided support. China's factory activity returned to expansion in March, lifting demand prospects for base metals. Sentiment was further supported by Beijing’s policy signals, including a commitment to maintain ample liquidity. On the supply side, inventories at the Shanghai Futures Exchange dropped 2.3% over the past week, signaling short-term supply tightness. Other supply constraints, including low stockpiles and disruptions caused by mine closures and operational delays, also contributed to upward pressure on prices. However, price gains remain capped due to concerns over the global economic fallout from the Middle East conflict, which could weigh on demand. Additionally, the restart of Boliden’s Tara mine and the production ramp-up at Ivanhoe Mines’ Kipushi project are expected to keep the market in a small surplus.

Zinc futures rose above $3,150 per tonne but remained near their lowest levels since December, pressured by growing inventories and slackened demand. China’s stocks continued to accumulate, reaching relatively high levels in the previous years. On the Shanghai Futures Exchange, inventories went up 3.3% over the week, while LME stocks also remain elevated. Global supply is further boosted by the restart of Boliden’s Tara mine and the ramp-up of Ivanhoe’s Kipushi project, alongside a strong annual production increase in Peru. These developments have offset concerns over tight supply, ongoing mine disruptions, and historically low inventories in certain regions. In addition, demand recovery has been slower than anticipated, despite positive signals from China, where industrial output rose 6.3% year-on-year in the first two months of 2026. Further weighing on prices, the US dollar remained strong, supported by safe-haven demand amid the ongoing conflict in the Middle East.