Zinc prices on the London Metal Exchange climbed for a seventh consecutive session, with cash settlement closing at $4,107 per tonne — the highest level since June 2022. The metal has now gained 55% from its mid-2025 trough of around $2,650, drawing increased attention across commodity markets.
The immediate driver behind the rally is a sharp drawdown in inventories. LME warehouse stocks have fallen from roughly 264,000 tonnes in December 2024 to about 95,000 tonnes currently, a decline of 64%. Available metal is now at its lowest since April 2023. The simultaneous drop in stockpiles and rise in prices points to physical tightness: buyers have less metal to draw on and are being forced to bid higher.
The squeeze is not evenly distributed worldwide. Shanghai Futures Exchange zinc inventories have risen over the same period, contrasting with the decline in LME warehouses. Tightness is concentrated in Western locations, while Chinese stocks remain relatively ample. Shipping costs, delivery rules and timing constraints mean Chinese metal cannot quickly fill the gap in Western markets. This regional divergence has provided additional support to LME prices.
Supply-side expectations are also strengthening. HSBC’s global commodities team forecasts a 2.1% year-on-year decline in global zinc production in 2026 to 12.5 million tonnes, citing lower output in Latin America. J.P. Morgan expects zinc prices to remain elevated through 2026 as global supply tightens and demand rises. Mine disruptions and smelter constraints have left the market cautious about future availability.
Demand, meanwhile, has held steady. Zinc is widely used in galvanized steel, with healthy consumption across autos, construction, household goods and industrial products. Even though supply is the primary concern today, firm demand limits the scope for any sharp price pullback.
The price strength is already reflected in mining equities. Since January 2026, Teck Resources shares have gained 47%, Glencore 46%, and Nexa Resources 60%. Major zinc producers are benefiting directly from higher LME prices.
Seven straight days of gains have pushed zinc close to a four-year high. The run suggests buyers have remained active across multiple sessions and near-term support is solid. However, after such a rapid advance, some traders may choose to lock in profits, creating the risk of a temporary pullback. At the same time, elevated Chinese inventories could ease the shortage if more metal flows into LME warehouses or reaches overseas buyers.
Looking ahead, the market’s focus rests on LME inventory movements, the pace of Chinese exports, and any fresh supply disruptions at mines. If Western stockpiles continue to fall, prices have room to push higher. If Chinese exports increase, the tightness may gradually moderate.
