LME zinc inventories at 108,400 tonnes represent just 2.8 days of global consumption, based on current annual demand of approximately 13.8 million tonnes. The inventory level has become the defining metric for the zinc market, with traders monitoring LME warehouse flows on an intraday basis for signs of replenishment.
Despite the critically low visible inventories, the zinc market narrative is splitting between the spot and forward outlook. Spot conditions are undeniably tight — visible inventories cover less than three days of demand. However, the ILZSG is projecting a market surplus of 89,000 tonnes in H2 2026 as new mine supply from Ozernoye (Russia), Gamsberg (South Africa), and the Dugald River ramp-up enters the concentrate stream.
The concentrate TC market reflects this future surplus expectation. Spot zinc concentrate TCs have firmed to $145-165/t from Q1 levels of $120-135/t, as smelters gain confidence in feedstock availability. However, smelter utilization in China remains at 76%, constrained by environmental inspections in Hunan and Liaoning provinces that have temporarily curtailed 180,000 tonnes of annualized zinc output.
On the demand side, galvanized steel production — which accounts for approximately 50% of global zinc consumption — held steady in May. US galvanized sheet output was 1.85 million tonnes, flat year-on-year, while Chinese galvanized production rose 3.2% on infrastructure stimulus spending. European galvanized output declined 1.8% as manufacturing PMI in the Eurozone remained contractionary at 49.2.
The current price is supported by critically low visible inventories, but the forward surplus narrative caps upside above $3,700/mt. Buyers should cover immediate needs at current levels but avoid building large strategic positions above $3,600/mt. The eventual delivery of new mine supply in Q4 2026 should pressure prices lower.