London zinc reached its highest level in more than four years on Tuesday, driven by supply concerns and limited availability outside China. Benchmark three-month zinc on the London Metal Exchange rose 2.29% to US$3,972 per metric ton as of 0300 GMT on September 1, 2026. Earlier in the session, the contract touched US$3,990, marking its highest level since May 2022.
The most-traded zinc contract on the Shanghai Futures Exchange also posted significant gains, rising 2.71% to 27,070 yuan (US$4,027.97) per tonne. The contract reached a peak of 27,165 yuan per tonne during the session, representing its highest level since January 2026. Falling refined zinc inventories outside China, combined with tight raw material supply and market positioning, have fueled a strong rally in zinc.
The metal posted its best month since January in August on both the LME and the SHFE, according to the report. Tight supply conditions outside China have drawn metal out of the country and into overseas warehouses, supporting prices while simultaneously lowering inventories in those markets. Analysts from Chinese broker Jinrui Futures noted that domestic Chinese inventories experienced a sharp drawdown on Monday, with spot purchasing concentrated in deliverable brands.
A significant supply squeeze in raw material zinc concentrate has pressured refiners and prompted some producers to advance their maintenance plans. Jinrui Futures analysts stated that September-October output had been expected to rise compared to July-August levels, but the raw material situation has led domestic smelters to add additional maintenance schedules. Zinc concentrate treatment charges have turned sharply negative due to the supply shortage, meaning refiners are now paying miners to process their material.
This represents an unusual market dynamic indicating severe supply constraints. Bullish speculative positions on the LME have reached their largest levels since the second quarter of 2022, according to data from broker Marex. Among other LME metals, copper added 0.45%, aluminium gained 0.62%, lead added 0.16%, nickel dipped 0.12%, and tin added 0.45%.
On the SHFE, copper gained 0.5%, aluminium rose 0.63%, lead lost 0.65%, nickel added 0.45%, and tin gained 0.93%. Source: The Edge Markets, September 2, 2026
Source: theedgemarkets.com