LME zinc held firm above $3,590/mt on June 19 as the SHFE contract rallied 2.56% to 24,250 CNY/t. The Shanghai move was driven by speculation that Beijing will announce additional infrastructure and property-sector support measures — which would directly boost galvanized steel demand.
Chinese galvanizer utilization rates have been improving since April. Average operating rates at major galvanizing lines now sit above 70%, up from below 60% in Q1. Combined with low finished goods inventories at Chinese steel service centers, this suggests actual demand pickup, not just speculative positioning.
The LME market remains exceptionally tight. On-warrant zinc stocks at 43,750 tonnes are down 82% year-on-year. The cash-to-3-month backwardation persists near $130/t, paying holders of nearby zinc a significant premium and reflecting real scarcity of prompt metal.
The ILZSG projects a global zinc market deficit of roughly 150,000 tonnes for 2026. Mine supply disruptions — including Glencore's production cuts and the Kazzinc smelter explosion in Kazakhstan — combine with steady demand from galvanized steel and die-casting. The deficit forecasts keep the market structurally supportive above $3,500/t.
Zinc remains tight. The backwardation and low on-warrant stocks mean any supply disruption will trigger sharp price spikes. Maintain coverage at current levels. Waiting for a pullback below $3,400/t carries significant risk given the stock situation. Watch LME spreads more than outright prices.