Zinc prices have extended their upward momentum, climbing for a seventh consecutive trading day and hovering near levels not seen in over four years, as widespread concerns over tightening supply continue to underpin the market.
At the time of writing, three-month zinc futures on the London Metal Exchange (LME) edged up to $3,886.75 per metric ton, after rising as much as 1% earlier in the session. Data shows that spot zinc traded at a premium of nearly $200 per ton over the three-month contract on Wednesday, marking the widest backwardation since December.
Meanwhile, treatment charges paid by smelters have plunged into negative territory due to a shortage of ore supply. According to Fastmarkets data, the fees that miners pay smelters to process concentrate into refined zinc have fallen to negative $110 per ton. Although smelters can offset some losses by selling by-products, persistently negative treatment charges heighten the risk of production cuts, which would further tighten supply.
One institution noted in a report that "tradable physical zinc liquidity on the LME is already at extremely low levels" and added that "smelting costs will provide a strong floor for zinc prices until a meaningful recovery in mine output occurs."
It is worth noting that copper prices have followed a similar trajectory amid tightening supply conditions, characterized by relatively low inventories, widening spot premiums, and negative treatment charges. Earlier, large volumes of copper were redirected to the United States as traders positioned for potential import tariffs on refined copper that the Trump administration might announce, draining stockpiles from other regions globally. Although the June 30 deadline for Commerce Secretary Howard Lutnick to submit tariff recommendations has passed, the White House has yet to unveil a final policy. Producers, consumers, and traders are closely monitoring whether Trump will extend trade protections, currently applied to semi-finished copper products, to raw materials like refined copper.
Zinc prices have accelerated since the start of May. Global zinc mine supply remained broadly stable in 2025, a rarity over the past decade, marking that year as a significant supply year. However, entering 2026, supply disruptions have become frequent. In early March, an earthquake struck Boliden's Garpenberg mine in Sweden, with the company later reporting an annual impact of approximately 70,000 metric tons of zinc. In early April, a hurricane in Australia, compounded by a subsequent diesel crisis, halted the transshipment and shipping of key minerals, including lithium and zinc ores.
HSBC's global commodities team has previously warned of extreme supply tightness signals in the zinc market. The team projects that global zinc mine output will decline by 2.1% year-on-year to 12.5 million metric tons in 2026, primarily due to production cuts in Latin America, alongside disruptions in smelting operations. With a modest recovery in demand across Europe and North America, market supply and demand are set to tighten further.
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