London Metal Exchange three-month zinc hit $3,633.50 per tonne in mid-May, the highest level since May 2022 and the culmination of a year-long rally that has confounded bearish consensus forecasts. The metal traded around $3,520-3,534/t in the week ending May 18 before settling near $3,524/t on May 18, according to LME closing data. (FACT: Reuters, Mining.com, Bitget, May 18-20, 2026)
The trigger was what Reuters columnist Andy Home described on May 20 as a "double supply hit." On May 5, a fatal explosion at Glencore's Kazzinc zinc complex in Kazakhstan — capacity 250,000-300,000 tonnes per year — killed two workers and forced the plant to reduced capacity. On May 13, a fire at Nexa Resources' Cajamarquilla smelter in Peru — the largest in the Americas, with roughly 300,000 tonnes of annual capacity — forced a full suspension of operations. Combined, the two outages removed an estimated 600,000 tonnes of nameplate Western smelting capacity from the market within eight days. (FACT: Reuters, SMM, Nexa Resources, May 5-13, 2026)
The price rally predates the May disruptions. LME zinc has been in a structural uptrend since October 2025, when a ferocious physical squeeze pushed on-warrant stocks to just 24,850 tonnes — barely one day of global consumption — and drove cash premiums above $300/t. Even after inventories partially recovered to approximately 96,000-110,000 tonnes by May 2026, the market has remained in a state of chronic tightness. (FACT: LME, Mining.com, TradingEconomics, October 2025-May 2026)
Analyst price forecasts reflect the uncertainty. Goldman Sachs, Citi, and Macquarie have maintained bullish price targets in the $3,200-3,600/t range, with some scenarios reaching $4,000/t if LME stocks fall to critical levels. Fastmarkets forecasts the average LME zinc price for 2025 at $3,218/t, with a slight increase expected in H1 2026 due to ongoing regional disparities. StoneX projects prices pulling back from above $3,000/t over the course of 2026 as increasing supply allows global stocks to return to more balanced levels — but that scenario now looks optimistic given the May supply hits. (FACT: Fastmarkets, StoneX, So Ok Trading — April-May 2026)
The International Lead and Zinc Study Group (ILZSG) has already acknowledged the structural shift. Its April 2026 assessment revised the 2026 balance from a 271,000-tonne surplus to a 19,000-tonne deficit — a 290,000-tonne swing driven by Western smelter attrition. That forecast did not account for the May Kazzinc and Cajamarquilla outages. The actual 2026 deficit could reach 100,000-150,000 tonnes if either facility remains offline for an extended period. (FACT: ILZSG, Reuters, May 20, 2026)
LME zinc has also attracted new exchange-level attention. On May 19, the LME confirmed new daily price limits for outright contracts for lead and zinc across all execution venues, a signal that exchange authorities are preparing for increased volatility as the structural deficit deepens. (FACT: Reuters via TradingView, May 19, 2026)
The $3,633.50 high is not a spike — it is the new baseline. The structural deficit means LME zinc will likely trade in a $3,200-3,800/t range for the remainder of 2026, with upside risk from further supply disruptions. If LME on-warrant stocks fall below 80,000 tonnes, expect backwardation to re-emerge and the next leg of the rally to target $3,800-4,000/t. Secure H2 2026 volumes now; the longer you wait, the wider physical premiums become. Monitor the LME cash-3M spread and Kazzinc/Cajamarquilla restart announcements as your two primary leading indicators.