Zinc prices have maintained their elevated trajectory through mid-2026, with LME three-month metal trading at $3,575/t on June 9. The market has not fully relaxed from the October 2025 squeeze, when LME inventories dropped to record lows and prices surged to three-year highs in a matter of days.
The refined zinc market presents a paradox: mine output is growing strongly (ILZSG data shows global mine production up 6.3-6.5% year-on-year in the first ten months of 2025), yet refined production has fallen approximately 2% over the same period. The bottleneck is smelter capacity, which cannot keep pace with concentrate availability.
LME inventory levels remain critically low by historical standards. While the October 2025 squeeze has subsided, stocks have not rebuilt meaningfully, leaving the market vulnerable to further tightness. The low stock environment means any supply disruption or sudden demand pickup could trigger another sharp price move.
On the demand side, galvanized steel demand from construction and infrastructure provides the primary consumption driver. Chinese infrastructure spending and global renewable energy installation support demand, though high prices have caused some demand destruction in price-sensitive applications.
Institutional forecasts for 2026 average prices range from $2,900/t (bear case) to $3,400-3,500/t (bull case), with Wood Mackenzie at approximately $3,000/t. The actual trajectory will depend on whether smelter capacity can expand to process growing concentrate availability.
Zinc buyers should monitor LME inventory levels as the key short-term price signal. Critically low stocks mean the market remains vulnerable to squeeze dynamics despite apparent mine supply growth. Consider securing H2 2026 volumes with flexible pricing mechanisms that allow for quick adjustment if inventories rebuild or tighten further.