Global zinc market reflects convergence of bearish and bullish sentiments

• Supply concerns drive zinc longs close to record highs
• Bearish bets hit two-year high on weak China demand

Metal Intelligence Centre: According to the latest LME Commitment of Traders Report (COTR), zinc is witnessing a rare market setup where both bullish and bearish positions are building simultaneously.

Zinc bulls have accumulated positions near a record high. The majority of this buying came during the Iran conflict, when fears of a supply shortage gripped the market.

The biggest trigger was the disruption of Iranian zinc concentrate exports to Chinese smelters. As shipments were disrupted, treatment charges (TCs) fell to their most negative levels on record, highlighting an acute shortage of concentrates available to smelters.

Supply concerns deepened further after major operational disruptions at Kazzinc in Kazakhstan and Nexa Resources in Peru, raising fears of lower output.

Accordingly, the International Lead and Zinc Study Group (ILZSG) revised its 2026 forecast to a 19,000-tonne global zinc deficit, reinforcing expectations of a tighter market. This emboldened the bulls.

On the other hand, unlike other base metals, where short positions have fallen to multi-year lows, zinc short positions rose sharply, reaching the highest level in two years and remaining close to a record high.

Typically, long positions rise while short positions decline in a rising market. Conversely, short positions build while bulls exit during a falling price trend. It is uncommon to see both bullish and bearish positions rise together. This suggests the market is split between two competing narratives.

The bulls are pricing in tightening supply and the risk of refined metal shortages.

The bears, however, are focused on slowing demand from zinc’s largest consuming sectors, especially in China.

During the first five months of the year, China’s real estate investment declined by 16% year-on-year, while fixed asset investment, a key indicator of infrastructure spending, contracted by 4.1%.

Both bulls and bears can’t be right at the same time. We need to wait to see which side emerges as the winner. Meanwhile, with both longs and shorts positioned aggressively, zinc is likely to remain highly volatile in the coming weeks.

Note: This article has been published as part of a content partnership between MIC and BigMint.