The London zinc market continues to rise despite expectations that prices would weaken this year. Three month zinc on the London Metal Exchange reached $3,858 per metric ton on August 25, its highest level in four years.
Tight LME inventories remain a major factor behind the rally. However, rising Chinese exports are now bringing additional zinc into LME warehouses, which could give traders holding short positions some relief.
Quick Facts
| Detail | Information |
|---|---|
| What happened | LME three month zinc reached a four year high of $3,858 per metric ton. |
| Where | London Metal Exchange, with additional zinc entering warehouses in Hong Kong. |
| When | August 25, 2026 |
| Who is involved | LME, Chinese zinc producers, investment funds, traders and global zinc consumers. |
| Current status | Zinc prices remain high while LME inventories stay relatively tight. Chinese exports are increasing. |
| Why it matters | More Chinese exports could ease the shortage in London, while supply concerns could continue supporting prices. |
London Zinc Market Tightens
Zinc prices have continued to move higher on the London Metal Exchange. The latest increase has surprised many traders who expected the metal to weaken during 2026.
The cash zinc premium over three month delivery has also widened. It recently reached $131 per ton.
This premium shows that nearby physical zinc remains valuable compared with metal available for delivery later.
LME inventories remain an important part of the story. Registered and off warrant stocks stood at about 124,677 tons, according to the supplied market data.
At the same time, zinc stocks on the Shanghai Futures Exchange have more than doubled since January. They reached about 155,954 tons.
Global Zinc Demand Grows Slowly
Global zinc demand has not shown strong growth. The International Lead and Zinc Study Group estimated that global zinc usage increased by about 1.5% year on year between January and May.
Refined zinc production grew faster, rising by about 3.5% during the same period.
That growth created a global refined zinc surplus of roughly 145,000 tons during the first five months of 2026.
However, much of the additional production came from China. A large amount of the surplus has therefore remained inside the Chinese market.
Chinese exports are now changing the situation
Hong Kong Becomes Zinc Export Hub
China has historically imported large amounts of refined zinc. Imports reached about 445,000 tons in 2024.
Domestic smelter capacity has since expanded. China is now moving closer to self sufficiency in refined zinc.
Imports fell by roughly one third to 299,000 tons in 2025.
China also became a net exporter during November and December last year.
The country returned to net exports in July 2026. Local market data showed exports of around 9,200 tons and net exports of about 4,100 tons.
Hong Kong has become an important route for Chinese zinc entering the LME warehouse system. The LME approved Hong Kong warehouses for good delivery in January 2025.
Zinc Bulls Bet on Higher Prices
The zinc market is facing two competing forces.
On one side, tight LME inventories and concerns about future mine supply are supporting higher prices.
On the other side, rising Chinese exports could increase available stocks in London. That could reduce pressure on traders who have bet against zinc prices.
Investment funds have also turned strongly bullish.
Funds now hold more than 110,000 tons of long zinc positions. This represents their largest combined bullish position since the LME began publishing its positioning reports in 2018.
Chinese Smelters Shape Zinc Market Outlook
The next major issue is whether Chinese smelters can maintain production despite extremely low treatment charges.
Spot treatment charges for Chinese zinc concentrate imports recently fell to about minus $117.50 per ton, according to the supplied market data.
Traders will therefore watch Chinese exports, LME inventories, mine production and smelter activity closely.
The London zinc market remains under strong upward pressure as tight LME inventories support prices. Zinc recently reached a four year high of $3,858 per metric ton.
