LME zinc at $3,491 per tonne on June 30 represents a market that has pulled back from the panic levels of late 2025 but remains structurally uncomfortable. The fourth quarter of 2025 saw LME zinc stocks plummet to levels covering less than one day of global consumption, triggering extreme backwardation and driving prices to multi-year highs above $3,600. Since then, some metal has returned: LME warehouse stocks now sit at 121,300 tonnes, down 0.9% in the latest reading but well above crisis lows. FocusEconomics notes that by mid-2026, LME zinc stocks still cover less than three days of global demand — a buffer that leaves prices highly sensitive to any supply disruption.
The concentrate market is where the real stress lives. Benchmark zinc treatment charges (TCs) collapsed to historic lows near zero in early 2026, signaling that smelters are competing fiercely for scarce mine output. The International Lead and Zinc Study Group (ILZSG) projects a market surplus for 2026, with improving mine supply from Africa - including the DRC's Kipushi mine restart - alongside higher output from Peru, China, and parts of Europe. StoneX argues that global mine supply is on track to rebound through 2025 and 2026. But those tonnes have not yet materialized in the refined market, and until they do, the concentrate tightness keeps a floor under prices.
Morgan Stanley has taken the most explicitly bearish stance among major banks, forecasting zinc at $2,900 per tonne in 2026, arguing that recovering LME inventories - as China exports more metal - and continued mine supply growth point to modest downside. But Fastmarkets' December 2025 outlook had the LME average at $3,218 per tonne for 2025, with a slight increase expected in H1 2026 before prices soften as surpluses emerge. The key question for H2 2026 is whether the mine supply rebound translates into refined metal quickly enough to ease the concentrate bottleneck. Chinese smelters, operating at reduced rates through much of 2025 due to concentrate shortages, have been gradually ramping back up, and Macquarie Bank data shows China lifted refined zinc output by 9% in 2025.
On the structural front, Korea Zinc's plan to build a $7.4 billion smelter in the United States, expected to begin operations between 2027 and 2029, signals long-term confidence in zinc demand. The project would produce zinc alongside other strategic materials and represents a significant diversification of smelting capacity away from China and Asia. But for 2026 and 2027, the global zinc market remains heavily dependent on Chinese smelter operating rates and on the pace at which African and Peruvian mine output reaches the market.
Demand-side signals are mixed. Chinese galvanized steel production — the largest single end-use for zinc — has been supported by infrastructure spending but weighed down by the property sector's continued weakness. European demand has been resilient but not booming, with construction activity subdued. The automotive sector, a significant zinc consumer through die-cast parts and galvanized body panels, faces headwinds from slowing global vehicle production. Fastmarkets forecasts vehicle production to contract slightly in 2026. Against this, renewable energy and grid infrastructure build-out provide structural demand growth, but zinc does not benefit from the same electrification narrative as copper or tin.
The policy dimension is less dramatic for zinc than for copper or aluminum, but it is not absent. US tariffs on steel and aluminum indirectly affect zinc demand through galvanizing. China's export policies on steel products influence the amount of zinc consumed in galvanized steel for export. And the broader macro environment — a strong US dollar, high interest rates, and uncertain global growth — weighs on all industrial metals. TradingEconomics notes that a firmer dollar makes dollar-priced zinc more expensive for buyers using other currencies, while the prospect of higher borrowing costs raises concerns about global economic growth and industrial metals demand.
Zinc at $3,491 per tonne is above most institutional forecasts for 2026, which cluster around $2,900 to $3,200. The premium is being paid for concentrate scarcity, not refined metal abundance. This matters for contract strategy. If you are buying refined zinc under annual contracts, the currently depressed TCs mean smelters have limited margin to discount — expect formula-based contracts to remain tight through 2026 even if LME dips. If you are buying galvanized steel, the zinc cost component is elevated but not the primary driver of finished steel prices; focus negotiations on the steel substrate cost. The near-term catalyst to watch: whether ILZSG's forecast surplus actually materializes in H2 2026, which would ease both refined premiums and the psychological pressure from low inventories. If it does, buyers who held off on long-term commitments will find better entry points in Q4. If it does not — if mine supply disappoints again — zinc could re-test $3,600+. The risk-reward favors locking 50-60% of H2 requirements now and leaving the balance floating, with a bias toward converting more to fixed if LME dips below $3,200.