- LME prices cross $3,015/t for first time this year
- LME zinc inventories fall by 61.5% in year-to-date
The London Metal Exchange (LME) zinc market surged sharply during Week 40 (6-10 October 2025), with prices climbing to multi-month highs as inventories plunged to critically low levels ahead of the LME Week (10-17 October). The price rally was fuelled by tightening LME stocks, smelter disruptions, and growing optimism over global economic recovery and US monetary easing.
Price trends
LME zinc cash-settlement prices trended sharply higher throughout the week, climbing for four consecutive days. Prices opened the week at $3,071/tonne (t) on 6 October and reached $3,113/t by 10 October. The three-month LME zinc contract mirrored this pattern, starting at $3,020/t and closing higher at $3,043/t on 9 October, then slightly falling to $3,023/t. This robust upward movement saw prices cross the $3,015/t mark for the first time this year. The strong performance underscored growing concerns over the availability of refined metal amid persistent drawdowns from LME warehouses.
Inventory analysis
LME zinc inventories continued their steep and alarming decline, reaching levels unseen since early 2023. Stocks dropped from 39,350 t on October 6 to 38,250 t on 9 October and further to 37,950 t by 10 October.
This represents a 61.5% fall year-to-date, signalling a severe tightening of freely available supply and amplifying the week’s price rally. The rapid destocking has sparked widespread speculation across the trading community about which house has been pulling zinc from LME warehouses — a topic expected to dominate LME Week discussions.
While Chinese zinc inventories had been a concern earlier in the quarter, some restocking was observed in domestic warehouses, reflecting improved trader sentiment and near-term confidence in demand recovery.
MCX zinc trends (6-10 October)
MCX zinc futures rose significantly during the week, supported by tightening supply conditions in both domestic and international markets. The October contract, which closed at INR 293,200/t on 6 October, saw strong gains early in the week, reaching INR 294,000/t by 7 October and consolidating near INR 294,450 by 10 October. This upward momentum was driven by falling LME inventories and other bullish factors.
The Indian market benefited from the improving global macroeconomic sentiment, tightening LME inventories, and a softer dollar. Technical indicators on MCX suggested strong bullish momentum, with potential for further gains, although some overbought conditions were noted.
SHFE zinc trend
On the Shanghai Futures Exchange (SHFE), the most-traded November zinc contract (ZN2511) rose 0.56% w-o-w to RMB 22,325/t on 10 October. The Chinese market mirrored global strength, supported by falling international stocks and robust sentiment in base metals.
However, concerns persist over muted domestic demand, particularly from the property and galvanising sectors, which limited further upside. The interplay between restocking efforts and slow consumption continues to define SHFE price behaviour.
Hindustan Zinc accelerates green logistics with 40 electric bulkers
Hindustan Zinc has deployed 40 electric bulkers to transport calcine to its Chittorgarh smelter under an eight-year contract, with the first 10 already in operation. The move shifts logistics from diesel to electric, reducing Scope 3 emissions and aligning with the company’s net-zero ambitions.
Outlook
The near-term zinc outlook is bullish, driven by the critically low LME inventories and ongoing supply tightness. However, volatility is expected, particularly concerning China’s demand and potential shifts in macroeconomic sentiment. The market will be closely watching for signals of a genuine pick-up in Chinese demand and monitoring the balance between tightening refined supply and potentially increasing global mined output. The upcoming LME Week is also a key event to watch for further market direction.
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