LME zinc continued its recovery from mid-June lows, settling at $3,612.5/mt on June 22. The metal has gained 4% from its $3,468 low on June 11, driven by supply-side fundamentals rather than demand improvement. Treatment charges (TCs) for zinc concentrate have fallen to $80-100/t, down 40% year-on-year, signaling tightening raw material availability.
Mine supply constraints are the primary driver. In Australia, ore grade decline at McArthur River and Century operations has reduced concentrate output by an estimated 5-8% year-on-year. In Peru, the Antamina mine has faced temporary throughput reductions. Global mined zinc production is projected to decline 1.2% in 2026, according to the International Lead and Zinc Study Group (ILZSG).
LME zinc stocks rose to 123,775t, up 2,875t or 2.38% from the prior week. The increase is concentrated in New Orleans and Singapore warehouses. Despite the weekly increase, total exchange stocks remain below the five-year average of 180,000t for this time of year.
Demand signals are mixed. Chinese galvanized steel output rose 2.7% year-on-year in May, but European steel production remains subdued. The auto sector, a key zinc consumer through galvanized sheet, is showing signs of a mild recovery in Europe as semiconductor supply constraints ease.
Zinc's supply-driven recovery is fragile — stocks are rising, which could cap upside. The current $3,500-3,600/mt zone is balanced risk-reward. For Q3 requirements, consider fixing at $3,500-3,550/mt. If TCs fall below $80/t, expect supply concerns to push prices higher. Watch LME stocks above 130,000t as a bearish signal.