LME zinc was the standout base metal for the week ending June 22, climbing 1.17% to $3,613/mt. The rally was built on thinning LME inventories — at 123,775 tons, available zinc stocks are 69% below the 400,000-ton peak of mid-2024 and sit at the lowest level since January. The cash-to-3-month spread has flipped into backwardation (cash premium over futures), a reliable physical-tightness signal.
The supply side remains constrained. Glencore's McArthur River mine in Australia — one of the world's largest zinc operations — has been running at 85% of capacity since a rockfall in April curtailed output. Meanwhile, European smelter restarts that were expected in Q2 have been delayed: Nyrstar's Budel smelter in the Netherlands remains on care and maintenance, and Glencore's Nordenham smelter in Germany won't restart until at least Q4. Europe produced 8% less refined zinc in January–May 2026 than the same period in 2025.
Demand is not booming — galvanized steel output in China and Europe is flat to slightly down — but it doesn't need to be when supply is this tight. The zinc market is in a structural deficit of approximately 160,000–180,000 tons for 2026, per the ILZSG's May forecast. That deficit is widening as the year progresses.
Zinc is the metal where the supply story is real and getting worse. If you haven't covered Q3 zinc requirements, the window is narrowing. At $3,613/mt, zinc is near the top of its recent range, which is uncomfortable — but a supply-driven market doesn't give you clean pullbacks. Split your Q3 coverage: 40% now at market, 40% on a pullback to $3,480–$3,520 if you get it, and 20% floating. The cash-3-month backwardation means forward hedging is actually cheaper than spot — lock in Q4 at the 3-month price if the backwardation persists.