Zinc is trading at approximately $3,500 per tonne on the LME as of early July 2026, according to MetalCharts data. The metal has rebounded dramatically from the $2,000s seen in 2024, after a deepening mine-supply deficit and a historic collapse in treatment charges drove smelters to cut output. The defining feature of the zinc market right now is the violent disconnect between a consensus surplus forecast for 2026-27 and physical market conditions that are the tightest in decades. LME inventories are near-depleted — FocusEconomics reports that official LME stocks cover less than three days of global demand. Traders have been withdrawing metal to off-market storage, partly for speculation and partly because physical buyers cannot find metal through normal channels.
Two acute disruptions have worsened the supply picture. A fatal explosion at Glencore's Kazzinc smelter in Kazakhstan cut output, and a fire at Nexa's Cajamarquilla smelter in Peru temporarily halted production. Cajamarquilla is only slowly restarting, according to FocusEconomics. These events come on top of structural cuts: European smelters reduced output or entered maintenance shutdowns after the energy shock, while Chinese smelters faced production cuts from pollution controls and energy restrictions. Treatment charges fell below break-even levels, forcing producers to slow operations.
The treatment charge story captures zinc's split personality. Spot Chinese zinc concentrate TCs turned negative for the first time ever in late 2024, and the 2025 annual benchmark hit approximately a 50-year low, crushing smelter margins. This forced smelters to cut refined output even as mine production began recovering. Fastmarkets reported that Chinese smelters were competing aggressively for concentrate as TCs dropped to historic lows by end-May 2025, prompting talk of production cuts. Sulfuric acid by-product credits partly cushioned margins but could not fully offset the TC collapse.
Now the pendulum is swinging. StoneX projects that Chinese RCTCs will recover from approximately $80/t in 2025 toward $160/t in 2026 as mine supply rebounds. China's zinc ore availability rose 45% year-on-year in January-July 2025 versus a 22% decline a year earlier. The ramp-up of China's Kunlun smelter, adding 560,000 tonnes per year from Q4 2025, is almost equivalent to China's annual net import volume. Fastmarkets expects these additions to support further appreciation in spot TCs in 2026. The concentrate market is loosening, which means more refined metal is coming — eventually.
But the question of when the surplus actually materializes in LME warehouses is what divides analysts. Morgan Stanley revised its 2026 zinc price outlook to $2,900/t, expecting LME inventories to recover as China exports more zinc and mine supply growth continues. Fastmarkets forecasts the 2025 average at $3,218/t with a slight increase in early 2026, but expects prices to decline as global surpluses build into 2026-27. The ILZSG projects global refined zinc demand rising just 1% to 13.86 million tonnes in 2026, while mine and smelter expansions outpace this tepid growth.
Goldman Sachs, Citi, and Macquarie take the other side, forecasting $3,200-3,600/t with potential to hit $4,000 if LME stocks fall to critical levels, according to Sook Trading. Their argument: the surplus exists on paper but not in exchange warehouses. Until metal actually arrives, the physical market tightness will keep prices elevated regardless of what supply-demand balance sheets show. The LME stocks-to-use ratio is the lowest in decades, and every disruption — like Kazzinc or Cajamarquilla — has an outsized price impact because there is no inventory buffer to absorb it.
Chinese smelter stockpiling is creating additional complexity. Fastmarkets notes that stockpiling by Chinese smelters is putting downside pressure on TCs but does not immediately translate into LME deliverable metal. Chinese domestic zinc prices remain weak relative to LME due to high domestic inventory levels and weak demand, potentially pushing some smelters to care and maintenance. StoneX analysis suggests this is unlikely to destabilize raw material supply chains but does mean the path from mine to LME warehouse is slower than the surplus projections imply.
Demand remains the weak link. Zinc's heavy exposure to construction — through galvanized steel — makes it vulnerable to weak global property markets. The ILZSG reported global demand growth of just 0.1% in 2025. Manufacturing demand faces headwinds from US tariff policy and uneven global growth. Electrification and renewable energy provide some support — galvanizing for solar structures and wind turbines — but not enough to offset construction weakness. The market needs demand to surprise to the upside for the surplus narrative to face a genuine challenge.
Zinc buyers are caught between a surplus forecast and a physically empty warehouse. The practical reality: you cannot buy zinc at the $2,900/t that Morgan Stanley forecasts for the annual average because there is no metal available at that price today. The surplus exists in mine production and smelter capacity, not in LME sheds. Your procurement strategy should be: secure physical supply first, optimize price second. If you depend on spot LME-linked pricing, you are exposed to severe backwardation and delivery risk. Instead, negotiate fixed-premium supply agreements with smelters directly, referencing the LME plus a negotiated premium that reflects physical availability. For Q3 2026, lock 70% of requirements at current ~$3,500/t levels with a $3,200/t floor. The window to buy zinc below $3,000/t will open when LME stocks rebuild — but that may not happen until Q1 2027 when Kunlun and other smelter expansions are fully ramped and Kazzinc/Cajamarquilla are back to full capacity. Until then, treat every shipment as at risk. The stocks-to-use ratio at under 3 days means any additional disruption — a smelter outage, a logistics bottleneck, a sudden demand spike — could send prices to $4,000+ within weeks. Have contingency inventory of 2-3 weeks.