LME zinc is trading at approximately $3,400 per tonne on June 10, up roughly 30% from the May 2025 average of $2,646/t. The rally is driven primarily by critically low visible inventories rather than genuine global tightness — a divergence that creates both opportunity and risk.
LME on-warrant zinc inventories have fallen from 230,500 tonnes at the start of 2025 to approximately 110,000 tonnes currently. This represents a 52% drawdown and leaves exchange-traded stocks at levels that create backwardation and squeeze dynamics. Nearby cash prices trade at a premium to forward contracts as buyers compete for prompt metal.
The low stocks contrast with the underlying global balance. The International Zinc Association reported a refined zinc deficit of 129 kt in 2024, but the market flipped to a small surplus of approximately 41 kt in 2025, with an even larger overhang projected for 2026 as mine supply grows and demand remains modest.
Fastmarkets sees 'notable oversupply in 2026-27 as mine and smelter expansions outpace tepid demand growth,' even though spot prices are supported by the inventory tightness. Morgan Stanley forecasts zinc to average $2,900/t in 2026, expecting price slippage as LME inventories recover on Chinese export flows.
The World Bank's April 2026 outlook forecasts an annual average of $3,000/t for 2026 — boosted by the strong early-year prices — easing to $2,750/t in 2027. The gap between spot ($3,400/t) and the World Bank forecast suggests the market is pricing in the inventory tightness at the expense of fundamental balance.
The divergence between low exchange stocks and a structurally surplus market is the key zinc dynamic for procurement. If you need near-term delivery, you'll pay the backwardation premium. For H2 2026 and 2027 volumes, consider hedging at forward prices that embed the expected surplus. The tightness is in exchange stocks, not in the global system — warehouse warrant data is the single most important indicator to watch.