Zinc Rebounds Amid Persistent Tight Supply

Zinc futures rose past $3,800 per ton, recovering from an over six-week low hit on October 2, amid persistent supply tightness as Western smelters struggle. Western refined zinc production fell 3.4% year-on-year in the first half of 2026 amid high energy costs and tight raw materials. Nyrstar’s strategic review of its loss-making Budel smelter in the Netherlands has added to concerns about production losses. The tight availability in the LME market has encouraged Chinese producers to ship more metal overseas, with China exporting 40,668 tonnes of zinc in August, the second-highest monthly volume in nearly two decades. 80% percent of China’s outbound shipments in August went to LME warehouses in Hong Kong, Singapore, and Taiwan, easing tightness in the market. However, the benchmark spread remains in backwardation, indicating that near-term supply is still relatively tight.

Zinc futures fell below $3,700 per ton, their lowest level in over six weeks, amid weak demand in China, while a stronger US dollar also weighed on sentiment. Shanghai Metals Market recently reported that orders at traditional galvanising plants remained weak and new orders were insufficient, while operating rates fell sharply around the holidays. The greenback also remained firm, reducing the appeal of dollar-denominated commodities by making them more expensive for buyers using other currencies. Still, zinc remained underpinned by tight supply conditions. China’s zinc production dropped for the first time in nearly a year in August amid smelter maintenance, mining disruptions and negative spot treatment charges. Output also declined at major mines such as Peru’s Antamina and Alaska’s Red Dog as producers work through lower-grade sections of their ore bodies. LME zinc inventories remain historically low, while tight physical availability is particularly evident across Western markets.

Zinc decreased to 3731.00 USD/T, the lowest since August 2026. Over the past 4 weeks, Zinc lost 3.24%, and in the last 12 months, it increased 23.57%.