LME Zinc Stocks Resume Declining as Western Smelters Struggle

LME zinc stocks declined by 2,400 tonnes to 96,250 tonnes, resuming the downward trend from 2025. While well above the crisis level of 35,000 tonnes from the October squeeze, the persistent decline signals Western refined zinc remains structurally tight despite earlier expectations of global surplus.

The drawdown reflects fundamental imbalance: Chinese smelters produce a surplus largely trapped domestically, while Western smelters shut down or reduce output. SMM estimates China's refined output will drop 1.6% month-on-month in May but rise 4.5% year-on-year. Outside China, smelter closures and accidents have removed significant capacity.

JP Morgan's May 29 note emphasized mine supply growth is running 5% below expectations, with disruptions in Sweden, the US, and Peru compounding smelter problems. LME stocks are a poor proxy for global availability, and periodic backwardation spikes like October 2025 remain a real risk as the regional divide persists.