Zinc Falls to Over 2-Month Low

Zinc futures fell to $3,670 per tonne in mid-October, their lowest level since early August, weighed down by the prospect of increased Chinese zinc concentrate availability and a stronger US dollar. Chinese mine output is expected to rise month-on-month in October as operations resume at mines previously disrupted by accidents and safety inspections. However, supply concerns persist in Western markets, where zinc production fell by 3.4% year-on-year in the first half of 2026 amid elevated energy costs and limited raw materials. Further production risks hinge on the outcome of Nyrstar’s strategic review of its loss-making Budel smelter in the Netherlands. Meanwhile, rising Chinese exports have helped ease tightness in the LME market, although the benchmark spread remains in backwardation, suggesting that nearby supply conditions remain relatively tight. A robust US dollar has added further pressure by making dollar-denominated commodities more expensive for holders of other currencies.

Zinc futures traded above $3,700 per tonne, recovering from a more than six-week low of $3,698 reached on October 2, amid persistent supply tightness as Western smelter capacity shrinks. 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% 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. A stronger US dollar also weighs on greenback-priced commodities.

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.