LME zinc held above the $3,550 level, trading at $3,557/mt on the cash contract. Three-month metal was at $3,562/mt in a narrow contango. The steady price action reflects a market in reasonable near-term balance, supported by tight concentrate supply but constrained by moderate demand from the galvanized steel sector.
SHFE zinc posted the strongest gain among the base metals on June 16, rising 2.56% to 24,250 CNY/mt. The rally was driven by short-covering and fresh buying after the contract broke above 24,000 CNY/mt resistance. Volume on SHFE was 30% above the 20-day average.
LME zinc stocks fell to 107,750t, a decline of 1,725t. Stocks have been trending lower since March, when they stood at 145,000t. The drawdown reflects a tightening physical market. Cancelled warrants account for 12% of the total, suggesting further outflows in the near term.
The zinc concentrate market remains structurally tight. Spot treatment charges are in the $30-40/dmt range, down from $80-100/dmt a year ago. Mine supply has been constrained by closures at several mid-tier operations, including the temporary suspension of the Myra Falls mine in Canada.
Zinc concentrate tightness should keep prices supported above $3,400. The $3,500-3,600 range offers reasonable entry points for hedge coverage. Buyers should monitor LME inventory trends: a sustained decline below 100,000t would signal acute physical tightness and warrant accelerated coverage.