Zinc Extends Retreat

Zinc prices slipped below $3,840 per tonne, extending their pullback from a more than four-year high, pressured by a stronger US dollar and weak sentiment across the base-metal complex. Investors ramped up bets on a Federal Reserve rate hike later this week after US inflation remained elevated in August, supporting the greenback, which makes dollar-denominated commodities more expensive for buyers using other currencies. Still, losses were limited by tight supply conditions. Production disruptions at several mines, including in China, have raised fears over the availability of zinc concentrates, while Middle East tensions have disrupted Iranian ore shipments. Meanwhile, LME inventories remain historically low and physical zinc availability is particularly tight outside China. Sharply lower smelter treatment charges, which have fallen into negative territory, further underscore the shortage of concentrate available to refiners.

Zinc prices hovered around $3,850 per tonne after pulling back sharply from an over four-year high, amid a broader, sentiment-driven selloff across the base-metals complex. The downturn was triggered by a report that the White House was hesitating over import tariffs on refined copper, prompting traders to unwind bullish positions and take profits. Prices also declined amid the prospect of increased Chinese export deliveries to the LME. Still, losses were limited by supply pressures, with production disruptions at several mines, including in China, while Middle East tensions have restricted Iranian ore shipments. Major zinc mines, including Antamina in Peru and Red Dog in Alaska, have seen output drop as they work through lower-grade sections of their ore bodies. LME warehouse inventories remain low relative to historical levels, while physical availability remains tight outside China. Sharply lower smelter treatment charges further signal tight concentrate supplies.

Zinc prices surpassed $4,000 per tonne for the first time since 2022, as the market faced significant supply pressures. Production disruptions at several mines, including in China, have raised concerns over concentrate availability, while heightened tensions in the Middle East have restricted Iranian ore shipments. Major zinc mines, including Antamina in Peru and Red Dog in Alaska, have seen output decline as they work through lower-grade sections of their ore bodies, while several producers have also reported weaker production. At the same time, LME warehouse inventories remain low relative to historical levels, while physical zinc availability remains particularly tight outside China. The tightness is also evident in sharply lower smelter treatment charges, signaling a shortage of zinc concentrate for processing. However, rising zinc exports from China could provide some relief to supply conditions in other major markets.