LME zinc prices held near $3,584/t on June 21, with steady open interest at 245,000 contracts. The warehoused stock draw continues: LME-registered inventories fell to 123,775t, down 2.8% week-on-week and the lowest since February. Cancelled warrants stand at 31%, indicating further potential drawdowns. The stock trajectory has tightened throughout 2026, with barely 3.4 days of global consumption covered.
Zinc concentrate treatment charges have recovered to $70-90/t, up sharply from the 2024 nadir of $30/t. The recovery reflects improved mine supply as new and restarted mines in Africa and South America reach production targets. However, refined zinc production growth remains constrained by European smelter energy costs and Chinese environmental inspections.
Chinese zinc production ran at 525,000t in May, down 3.2% month-on-month, as smelters in Sichuan and Yunnan faced power supply restrictions during the hydro season transition. The China Nonferrous Metals Industry Association expects June output to recover to 540,000t as power returns.
Galvanizing demand, which accounts for roughly 50% of global zinc consumption, shows stability. US galvanized steel production inched up 0.8% in May. European galvanizers ran at 78% capacity. Chinese galvanized sheet output rose 4.1% year-on-year, supported by infrastructure spending. Automotive sector zinc use grew 3.2% globally, driven by NEV body-in-white applications.
JP Morgan projects LME zinc averaging $3,400-3,500/t in H2 2026, with the tight physical market providing a floor near $3,200/t. The bank's bull case ($3,800/t) requires a sustained stock draw below 100,000t.
Zinc stocks below 125,000t with 31% cancelled warrants mean the physical market is tight. Procure H2 volumes now rather than waiting for dips below $3,400/t. For North American buyers, the MW Premium sits at $0.18/lb, up from $0.14/lb in Q1. Secure SHFE-linked contracts if importing into China — the domestic premium-to-LME is narrow, providing a cost advantage.