Zinc prices have climbed to their highest level since June 2022 on the London Metal Exchange, driven by a sharp contraction in physical market availability and mine supply constraints. LME zinc for cash settlement closed at $4,107 per tonne, equivalent to $1.86 per pound, on Thursday, representing a 55% increase from a trough of approximately $2,650 recorded in mid-2025, according to Northern Miner reporting on August 28, 2026. The price surge reflects a dramatic drawdown in LME warehouse inventories, which have declined from approximately 264,000 tonnes in December 2024 to roughly 95,000 tonnes, a 64% reduction that has left available metal supplies at their lowest levels since April 2023, as reported by Fastmarkets.
Market participants indicate that China is beginning to increase zinc exports following a period of net imports this year. The export activity is driven by significant arbitrage opportunities, with imported zinc priced approximately $720 per tonne higher than domestic Chinese metal this week, the widest spread for imports since 2022. BMO Capital Markets noted in a Friday report that refined zinc exports from China could reach around 20,000 tonnes in August, driven by strong domestic production and weak demand that has created inventory buildups.
However, BMO also noted that the rise in Chinese exports is expected to place downward pressure on LME zinc prices that have recently climbed to nearly $3,900 per tonne. The simultaneous decline in inventory and rise in price demonstrates physical market tightness in Western warehouses. In contrast, Shanghai Futures Exchange zinc inventory has increased during the same period that LME stock has drained, according to Reuters reporting.
HSBC's Global Commodity Team forecasts a 2.1% year-on-year decline in global zinc consumption in 2026 to 12.5 million tonnes, attributed to lower production levels in Latin America. JP Morgan expects zinc prices to remain elevated throughout 2026 as global supply continues to tighten and demand rises, according to Investing.com reporting. Major zinc producers have seen significant equity market appreciation in response to the elevated price environment.
Teck Resources has experienced a 47% share price increase, Glencore a 46% increase, and Nexa Resources a 60% increase since January 2026. Source: Northern Miner (August 28, 2026), reporting on London Metal Exchange data, Fastmarkets analysis, BMO Capital Markets research, HSBC Global Commodity Team forecasts, and Investing.com reporting.
Source: northernminer.com