The zinc market in mid-2026 presents a study in contradictions. On paper, the global market is in surplus — ILZSG data shows mine output growing at 4.6% and concentrate availability increasing. But the refined market, which is what buyers actually purchase, remains tight, prices elevated, and stocks low.
The resolution of this paradox lies in understanding the zinc value chain. Mine output growth does not automatically translate into refined output growth because smelter capacity — the critical intermediate step — is constrained by environmental regulations, aging infrastructure, and margin pressure from rising energy costs.
Demand from galvanized steel provides a stable floor. Global infrastructure spending, particularly in China's Belt and Road projects and US infrastructure investment, supports galvanized steel consumption. Automotive demand adds another dimension, with galvanized sheet used extensively in vehicle body panels.
In the near term, the low LME inventory environment introduces significant tail risk. Any supply disruption or logistics bottleneck could trigger another squeeze similar to October 2025. While the probability of a repeat squeeze has diminished as the market adjusts, the underlying vulnerability remains.
For H2 2026, the most likely scenario is continued range-bound trade between $3,000-3,600/t, with upside risk from any further supply disruption and downside risk limited by low inventories and smelter constraints.
Zinc procurement should focus on refined metal availability, not concentrate market conditions. The disconnect between ore and metal is likely to persist. With LME stocks critically low, consider holding buffer inventories and maintaining flexibility to source from multiple regions. Avoid assuming that headline surplus projections will translate into lower spot prices.