The zinc market entered May 2026 already tight — LME inventories at roughly 156,000 tonnes were a fraction of the 400,000-tonne peak seen in 2024, and the International Lead and Zinc Study Group (ILZSG) had just revised its 2026 balance from a comfortable surplus to a deficit. Then came the double supply shock. (FACT: Reuters, May 20, 2026)
Kazzinc blast, May 5. An explosion ripped through the dust-collection unit at Glencore's Kazzinc zinc complex in Ust-Kamenogorsk, Kazakhstan, killing two workers and injuring five. The blast triggered a fire and partial building collapse. Kazzinc, 70%-owned by Glencore, is Kazakhstan's largest zinc producer. Since the incident, the company has confirmed its plants are running at reduced capacity. Before the blast, Kazzinc accounted for roughly 250,000–300,000 tonnes per year of refined zinc output — a meaningful portion of non-Chinese Western supply. (FACT: Reuters, May 5, 2026; Glencore Kazzinc statement)
Cajamarquilla fire, May 13. Just eight days later, Nexa Resources announced a fire at its Cajamarquilla smelter near Lima, Peru — the largest zinc smelter in the Americas. Four workers were injured; there were no fatalities. The fire has caused damage to portions of the smelter infrastructure, and operations remain suspended as the company investigates the cause and assesses the restart timeline. Cajamarquilla produced 345,300 tonnes of refined zinc in 2025, its highest output since commissioning. Nexa has stated it does not currently anticipate a "material impact" from the incident, but has not provided a firm restart date. (FACT: Nexa Resources SEC filing, May 13, 2026; SMM)
The two events compound an already difficult supply picture. Western zinc smelters have been struggling for years under the weight of low treatment charges, high energy costs, and ageing infrastructure. Reuters has described the Western smelting sector as a "critical minerals crisis" in waiting — China's share of global refined zinc production has risen from 33% in 2007 to nearly 50% today, and the West has lost the capacity to replace shortfalls quickly. (FACT: Reuters, July 2025)
LME zinc has been in a one-year rally. Three-month zinc hit a near four-year high in mid-May, up approximately 13% year-to-date, with the latest leg triggered directly by the Kazzinc and Cajamarquilla disruptions. Combined LME inventory sits at roughly 156,000 tonnes, up by only 21,125 tonnes since the start of the year — a stark contrast to the 2024 peak of almost 400,000 tonnes. The Western smelter bottleneck has both capped inventory rebuilds and stymied the transition to the supply surplus that ILZSG had forecast just six months earlier. (FACT: Reuters, May 20, 2026; LME data)
The structural imbalance is telling: global mined zinc production surged by 4.8% year-on-year in 2025 after three consecutive years of contraction, but all of the growth in refined output (+1.7% overall) came from China, where smelters lifted output by 6.7%. Western refined production actually contracted — and the Kazzinc and Cajamarquilla disruptions will worsen that trend in 2026. (FACT: ILZSG, April 2026)
For a market that was expected to be in a 271,000-tonne surplus as recently as October 2025, the speed of the reversal has been remarkable. The ILZSG now projects a 19,000-tonne deficit for 2026. With 600,000 tonnes of Western capacity offline or impaired, that deficit forecast may prove optimistic. (FACT: ILZSG, April 2026)
Action: Review all unfixed zinc and galvanized steel procurement volumes for H2 2026. The capacity loss is material relative to a market of ~14 million tonnes — 600,000 tonnes represents over 4% of global refined supply. With LME stocks already low and further disruption risk elevated, secure at least 60–70% of H2 requirements under fixed-price or collared structures. Avoid relying on spot availability; the physical premium for prompt delivery is likely to widen sharply.
Horizon: Kazzinc's reduced-rate operations suggest weeks to months before normalization; Cajamarquilla's restart timeline is entirely unguided. The Western smelter bottleneck is a multi-year structural problem, not a transient one. Expect elevated zinc prices and wider physical premiums through Q3 2026 at minimum.
Trigger: Watch for Kazzinc restart announcements and Nexa's restart timeline for Cajamarquilla. A confirmed prolonged outage at Cajamarquilla (>60 days) would remove another ~60,000–70,000 tonnes from the market. Track LME zinc spreads — widening backwardation signals physical squeeze intensification.