Zinc hits four year high as LME stocks fall sharply

Zinc prices reached their highest level since June 2022 on the London Metal Exchange on Thursday. The cash settlement price closed at 4,107 dollars a tonne, representing a 55 per cent increase from the mid-2025 trough of approximately 2,650 dollars. This surge coincides with a significant reduction in available physical metal, which has tightened the market considerably.

Warehouse stockpiles on the LME have dropped from about 264,000 tonnes in December 2024 to roughly 95,000 tonnes. This 64 per cent drawdown leaves available metal at its lowest level since April 2023, according to Fastmarkets. The simultaneous decline in inventory and rise in price indicates physical tightness, as buyers have less stock to draw on. This concentration of tightness is mostly found in Western warehouses, while Shanghai Futures Exchange inventory has risen over the same period, Reuters reported.

Outlook forecasts suggest continued pressure on supply. HSBC predicts a 2.1 per cent year-on-year decline in 2026 production to 12.5 million tonnes, driven by lower output in Latin America. JP Morgan expects prices to remain elevated through 2026 as global supply tightens and demand rises. Major producers including Teck Resources, Glencore and Nexa Resources have seen share price increases since January 2026, reflecting the broader market sentiment.