Zinc rose to its highest price in two weeks on Monday, helped by falling stocks on exchanges and high power prices that raise the cost of making the metal. The global refined zinc market slipped into a small deficit in August.
At a glance
- Three-month zinc on the LME touched $3,821.50 a tonne, the highest since October 12.
- Zinc stocks in Shanghai fell 5% in a week to their lowest since March.
- The refined zinc market swung to a 3,900-tonne deficit in August from a surplus in July.
Background
Zinc is used mainly to galvanise steel, coating it to stop rust. Smelting zinc uses a lot of electricity, so high power prices raise costs and can cut output. When metal for immediate delivery costs more than metal for later delivery, a pattern called backwardation, it signals that supply is tight right now.
What happened
Benchmark three-month zinc on the London Metal Exchange (LME) rose 1.5% to $3,800.50 a tonne by 1030 GMT on Monday, Reuters reported. Earlier it touched $3,821.50, its highest since October 12.
Shanghai Futures Exchange zinc stocks fell 5% in a week to 137,139 tonnes, the lowest since March. Cash zinc on the LME traded about $80 a tonne above the three-month price, a sign of tight near-term supply.
Why prices rose
High power prices, falling production in Peru and shrinking stocks are supporting zinc, one trader said. The International Lead and Zinc Study Group reported that the refined zinc market swung to a deficit of 3,900 tonnes in August, from a surplus of 27,500 tonnes in July.
Mine supply is likely to grow in 2027, Citi said in a note after LME Week, but some market participants think forecasts are "too optimistic on the scale of growth".
What it means
Tight stocks can make prices jumpy, especially as one entity holds 30% to 40% of LME zinc warrants and cash contracts, exchange data showed. Elsewhere, copper edged up 0.1% to $14,328.50 a tonne. A strike at Teck's Highland Valley mine had little effect, since the mine produces about 100,000 tonnes a year, Panmure Liberum analyst Tom Price said.
Our read
Outlook: bullish. Falling stocks, a swing to deficit and high power costs are supporting zinc, though mine supply is expected to grow in 2027.
What to watch
- Whether exchange zinc stocks keep falling in Shanghai and London.
- Power prices for zinc smelters and production in Peru.
- The next International Lead and Zinc Study Group monthly data.
For information only, not investment advice.
Zinc price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-26: LME zinc touches $3,821.50 a tonne, its highest since October 12.
Supply Drivers
High power prices and lower Peruvian output are limiting zinc supply.
Inventory Drivers
Shanghai zinc stocks fell 5% in a week to the lowest since March, and LME cash trades at a premium.
Global Consumption
The refined market swung to a 3,900-tonne deficit in August, showing demand outpacing supply.
What could lift prices
- Exchange stocks are falling and near-term supply is tight.
- Some analysts think 2027 mine supply growth is being overestimated.
What could weigh on prices
- Mine supply is likely to grow in 2027, according to Citi.
- The August deficit was small at 3,900 tonnes and could reverse.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Peru | Medium | Declining zinc production there is one reason supply is tight. |
| China | Medium | Shanghai exchange zinc stocks fell to their lowest since March. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Galvanizing | Negative | Steel galvanisers pay more as zinc prices rise. |
Who gains, who loses
- Zinc miners and smelters: Prices are at a two-week high with tight stocks.
- Steel galvanisers: They face higher costs for zinc coating.
Other ways this could play out
- If power prices stay high and stocks keep falling, zinc could test new highs.
- If new mine supply arrives faster in 2027, prices could ease.
Price risks
- A single holder of 30-40% of LME warrants could make prices volatile.
- Weaker steel demand in China would cut zinc use.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
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