- LME zinc rises 2.1% w-o-w to $4,070/t
- Low inventories, supply disruptions support prices
LME zinc prices strengthened during the week ended 28 August 2026, supported by tightening nearby supply, mine and smelter disruptions and concerns over refined metal availability outside China. However, a rebound in exchange inventories and elevated price levels may limit further gains.
LME cash settlement prices rose 2.1% w-o-w to $4,070/t on 28 August from $3,985/t on 21 August. Three-month zinc prices increased 2.3% to $3,930/t from $3,840/t over the same period.
Zinc briefly touched $4,107/t on 27 August, its highest level since June 2022, before easing on Friday. The cash-to-three-month spread remained elevated at $140/t on 28 August, although it narrowed sharply from $267/t on 27 August, indicating that nearby supply remained tight despite some easing.
Supply concerns support zinc
Zinc fundamentals remained supported by mine and smelter disruptions. Heavy rainfall and flooding in China threatened mining and smelting operations, while production adjustments at a Southwest China mine are expected to reduce August concentrate output by around 1,000 t.
Maintenance at a Central China smelter could further reduce refined zinc production by around 1,000-1,500 t. These disruptions add to weaker output from several major global producers.
Glencore’s own-sourced zinc production declined 21% y-o-y to 365,600 t in H1CY’26, although its full-year guidance remained at 700,000-740,000 t. Boliden’s zinc concentrate production fell 16.8% q-o-q to 74,200 t, while MMG produced 106,000 t in H1CY’26, equivalent to 48% of its full-year guidance.
Nexa reported zinc production of 79,300 t, up 8% y-o-y, while Minmetals Resources produced 105,800 t and retained its annual guidance of 215,000-235,000 t.
The global refined zinc market shifted into a 31,400-t deficit in June from a 22,400-t surplus in May. However, the market remained in a 120,000-t surplus during H1CY’26, indicating that recent tightening has yet to translate into a sustained global deficit.
LME stocks rebound
LME zinc inventories increased by 4,700 t during the week to 97,950 t on 28 August from 93,250 t on 21 August. The 5% weekly increase reversed part of the earlier decline and provided some relief to the physical market.
Despite the rebound, stocks remained around 63% below the 264,000-t level recorded in December 2024. Low inventories therefore continue to leave the market sensitive to further supply disruptions.
The cash premium reached around $217/t on 27 August before narrowing to $140/t on 28 August. The decline in the spread reduced some of the immediate pressure on nearby availability, although the premium remained elevated.
Higher exchange stocks and elevated zinc prices may weigh on spot demand, particularly among price-sensitive consumers in China. However, renewed warehouse withdrawals or slower inflows could quickly revive concerns over availability.
MCX zinc follows global gains
MCX zinc futures settled at INR 415.2/kg on 28 August, up 0.34% on the day. The domestic market continued to track the rise in LME zinc, while the weaker rupee provided additional support to Indian prices.
At levels above INR 415/kg, higher replacement costs may increase resistance from domestic consumers. Physical buyers may therefore continue to limit purchases unless downstream demand improves sufficiently to absorb higher raw-material costs.
Indian buyers remain cautious
India’s domestic zinc market is likely to remain firm as international prices stay above $4,000/t and nearby supply remains relatively tight. Elevated LME cash premiums are also increasing replacement costs for domestic consumers.
However, the rebound in LME inventories and narrowing cash-to-three-month spread could provide some relief if sustained. Domestic physical premiums are therefore likely to depend on how effectively international supply tightness translates into actual availability in India.
Galvanisers and other zinc consumers may continue to adopt a hand-to-mouth purchasing strategy, particularly if downstream steel demand remains subdued.
Outlook
LME zinc prices are expected to remain supported during the week ahead, with mine and smelter disruptions, historically low exchange inventories and concerns over refined metal availability providing a firm fundamental backdrop.
However, the correction after the $4,107/t peak and the rebound in LME stocks suggest that resistance may increase at higher levels. Sustained prices above $4,000/t could also encourage consumers to defer purchases and producers to respond to stronger margins.
For the coming week, $3,950-4,000/t is expected to provide support, while $4,100-4,150/t may act as resistance.
Market participants are likely to monitor LME warehouse movements, the cash-to-three-month spread, Chinese mine and smelter operating rates, global mine supply and the MCX-LME price relationship. A renewed decline in LME stocks or widening backwardation could support another move higher, while continued inventory inflows and weaker Chinese demand may trigger profit-taking.
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