LME zinc prices inch down despite lower stocks; tags likely to move in narrow range

• Demand for zinc products remains firm in Asia, Middle East
• EU buyers wary amid tax concerns, weak construction activity

Zinc prices on the London Metal Exchange (LME) dropped slightly during week 28 (7-11 July 2025), as production picked up in major regions and economic uncertainty continued in Europe and China. This happened even though zinc stock levels in LME warehouses decreased significantly.

Prices slip 0.5%, inventories down 6% w-o-w

The LME three-month zinc contract settled at around $2,718/tonne (t), slipping 0.45% from approximately $2,727/t in week 27 (30 June-4 July). Prices remained under pressure throughout the week, struggling to sustain rallies above the $2,780/t resistance level, as traders reacted to evolving supply-demand dynamics.

Contrary to typical oversupply pressure, LME warehouse stocks declined 5.98% w-o-w to 107,330 t from 114,160 t, reflecting macroeconomic caution and selective drawdowns, rather than aggressive inflows.

Demand holds steady, but buyers stay cautious

Demand for zinc-based products such as galvanised steel and zinc alloys stayed mostly steady in Asia and the Middle East. However, ongoing issues such as export-related taxes and weak construction activity in the European Union made buyers hesitant to build up extra stocks.

In India, zinc demand stayed flat w-o-w. Vedanta, a major zinc producer, reported mined metal output of 265,000 t in the April-June quarter of FY’26, which was a 1% increase from the same time last year, thanks to efficient planning and smooth operations.

Investor activity, market signals

Some investment funds reduced their zinc buying during the week as prices failed to rise past key levels. The growing gap between current and future zinc prices shows that the market expects more metal to be available soon. This has led to more short-term trading and quick buying-selling strategies.

Outlook

Zinc prices on the LME are likely to stay in a narrow range for now. Stable demand is being matched by rising supply and concerns over the global economy. If more zinc keeps coming from big producers such as China and Europe, prices may not go up much during the rest of Q3CY’25.

Traders will be watching closely for updates on smelter activity and any economic news from the US and EU that could guide price movements.