Zinc Holds Rebound

Zinc futures hovered above $3,700 per ton, holding onto a rebound from a more than two-month low of $3,664.9 per ton touched on October 16, amid persistent near-term supply tightness. Tight supply is particularly evident in Western markets, where zinc production fell 3.4% year-on-year in the first half of 2026 amid high energy costs and limited raw material availability. Investors are also watching the outcome of Nyrstar’s strategic review of its loss-making Budel smelter in the Netherlands, with potential operational changes posing a threat to supply. Meanwhile, China’s refined zinc production fell 1.9% month-on-month and 6.4% year-on-year in September. Adding to supply concerns, inventories monitored by the Shanghai Futures Exchange declined 1.5% from the previous week, providing further support for prices.

Zinc futures fell below $3,700 per ton 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.