Zinc Market Holds Tight as Supply Disruptions Persist

Zinc held above $3,900 per tonne, remaining close to the $4,037 reached on September 9th, its highest level since April 2022, supported by tightening supply and disruptions across major producing regions. Middle East tensions have restricted Iranian ore supplies, while mine disruptions have further constrained availability. China’s zinc output fell 1.8% year-on-year in August, marking its first annual decline in nearly a year and the lowest level since May 2025, as smelter maintenance, mining disruptions and negative spot treatment charges weighed on production. Output has also been affected at major mines including Peru’s Antamina and Alaska’s Red Dog, where producers are working through lower-grade ore sections. Meanwhile, LME inventories remain historically low, particularly in Western markets. An industrial accident was also reported at Korea Zinc’s Onsan smelter, although no production cuts or shutdowns have been announced.

Zinc prices fell toward $3,900 per ton as a stronger US dollar weighed on the market. Rising Fed rate-hike expectations boosted the dollar, making greenback-priced commodities more expensive for global buyers. However, the downside was limited by tightening supply and lower Chinese production. China’s zinc output fell 1.8% year-on-year in August, marking its first decline in nearly a year and the lowest reading since May 2025, amid smelter maintenance, mining disruptions and negative spot treatment charges. Lower production was also recorded at major mines, including Antamina in Peru and Red Dog in Alaska, as producers work through lower-grade sections of their ore bodies. At the same time, LME inventories remain historically low, with physical tightness particularly acute in Western markets. Meanwhile, an industrial accident was reported at Korea Zinc’s Onsan smelter last week, though no production cut, maintenance shutdown or suspension of operations has been announced.

Zinc prices rose to around $3,930 per ton, rebounding from a near one-month low amid relatively tight supply fundamentals. Lower mine output and production disruptions have constrained concentrate availability. Sharply lower smelter treatment charges, which have fallen into negative territory, further underscore the shortage of feedstock available to refiners. 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 inventories also remain low by historical standards, while physical zinc availability outside China remains particularly tight. These concerns more than offset pressure from the stronger US dollar following the Federal Reserve’s hawkish rate hike. A firmer dollar typically weighs on dollar-denominated commodities by making them more expensive for buyers using other currencies.