LME zinc rises 2% w-o-w as inventories fall to 97,075 t

• Further LME inventory drawdown and tightening concentrate supply support zinc prices
• MCX gains despite lower open interest, while SHFE joins the global rally

London Metal Exchange (LME) zinc prices rose by around 2% during the week ended 7 August 2026, supported by continued declines in exchange inventories, tightening concentrate availability and persistent concerns over mine and smelter supply. Chinese zinc prices also strengthened, while the cash-to-three-month spread remained backwardated, indicating tight nearby availability.

LME zinc cash settlement prices increased by 2% week on week to settle at $3,785/t on 7 August, compared with $3,710.5/t on 31 July. The three-month contract rose 2.8% to $3,732/t from $3,631/t. Meanwhile, LME inventories declined by 2,725 t to 97,075 t from 99,800 t, extending the recent drawdown and moving stocks further below the 100,000-t threshold.

The cash contract remained at a premium to the three-month contract, with the spread at around $53/t on 7 August. LME zinc touched a weekly high of $3,857/t on 6 August before easing on profit-booking.

Tight concentrate supply keeps fundamentals supportive

The zinc market remained supported by concerns over concentrate availability and constrained mine supply. Low treatment charges, mine disruptions and smelter maintenance have raised concerns over feedstock availability for refined zinc production.

Global mine supply also remains under pressure. Glencore’s own-sourced zinc production declined 21% year on year to 365,600 t in H1CY’26, reinforcing concerns over mined material availability. Meanwhile, ongoing constraints in the Chinese concentrate market have increased expectations of production adjustments if raw material availability remains tight.

LME inventories have fallen from 105,800 t on 24 July to 97,075 t on 7 August, a decline of more than 8,700 t in less than two weeks, adding to the bullish market narrative.

Korea Zinc, the world’s largest zinc smelter, reported consolidated revenue of KRW 6.37 trillion in Q2CY’26, while operating profit surged 126.8% year on year to KRW 587 billion. Strong earnings underline the favourable environment for zinc and other non-ferrous metals.

MCX gains despite lower open interest

On the domestic front, MCX zinc futures tracked international gains, with the August contract settling at INR 389,100/t on 7 August, up 0.8% from INR 386,000/t on 3 August. The contract touched a weekly high of INR 397,000/t on 6 August before easing.

However, open interest declined from 2,970 lots on 3 August to 2,752 lots on 7 August, down 7.3%. The combination of higher prices and lower OI suggests that the rally was not accompanied by significant fresh positioning, with some unwinding and profit-booking at higher levels.

SHFE zinc, meanwhile, joined the international rally, rising from 3,704 on 3 August to 3,783 on 7 August, gaining around 2.1%. This marks a shift from the previous week, when SHFE lagged the stronger LME market.

HZL benchmark remains above domestic spot prices

India’s domestic zinc market remained firm amid strong international prices. Hindustan Zinc Ltd (HZL) raised its zinc ingot benchmark by INR 4,400/t to INR 398,200/t on 6 August.

BigMint assessed SHG zinc ingot prices at INR 396,700/t ex-Delhi on 5 August, leaving HZL’s benchmark around INR 1,500/t above the domestic spot assessment. The premium could keep buyers cautious and procurement largely need-based, although continued LME gains could support domestic spot prices.

Zamak prices also strengthened alongside primary zinc. As of 6 August, Zamak 3 was assessed at INR 408,000/t ex-Delhi, while Zamak 5 stood at INR 414,000/t ex-Delhi.

Outlook

BigMint expects LME zinc prices to remain supported over the next one to two weeks, with declining exchange inventories, tight concentrate availability and supply concerns providing a firm fundamental backdrop. The further fall in LME stocks to 97,075 t and continued backwardation indicate tight nearby availability.

However, falling MCX open interest despite higher prices suggests cautious domestic positioning. The premium of HZL’s benchmark over spot prices could also limit aggressive physical buying.

In the near term, support is seen at $3,700-3,730/t, while resistance is expected around $3,850-3,900/t. LME inventory movements, Chinese supply and demand, and the cash-to-three-month spread will remain key indicators to watch.