Zinc futures on the London Metal Exchange settled near $3,614 per metric ton, maintaining a four-year high as a convergence of smelter disruptions, declining inventories, and a confirmed ILZSG deficit forecast kept the physical market under strain. Zinc has gained 32% over the past twelve months, outperforming copper and nickel among the base metals complex, and the rally shows few signs of exhausting itself.
The International Lead and Zinc Study Group confirmed in its April 2026 forecast that the refined zinc market will post a deficit of 19,000 tonnes this year. While modest in absolute terms — 19,000 tonnes is less than 0.2% of annual global consumption of approximately 14 million tonnes — the deficit matters because it comes after years of surplus and because the supply disruptions that are driving it are concentrated in specific, hard-to-replace smelting capacity.
Glencore's Kazzinc operation in Kazakhstan, one of the world's largest zinc smelters with capacity exceeding 300,000 tonnes per year, continues to operate at reduced rates following an explosion earlier this year. Glencore has not provided a public timeline for full restoration, and the smelter's location in a region with limited alternative processing capacity means the lost output cannot easily be replaced. Each month of reduced Kazzinc output subtracts roughly 15,000-20,000 tonnes from the global refined market — more than the full-year deficit forecast by ILZSG.
Nexa Resources' Cajamarquilla smelter in Peru, the largest zinc refinery in the Americas at 340,000 tonnes annual capacity, is gradually restarting after a fire-related shutdown. Nexa has characterized the restart as progressing but has not committed to full capacity restoration by any specific date. The Cajamarquilla disruption compounds the Kazzinc shortfall, and together they explain the bulk of the market's swing from modest surplus to deficit.
Boliden's Garpenberg mine in Sweden — one of the world's most efficient underground zinc operations — suffered a seismic event earlier in 2026 that raises the risk of prolonged lower output. Garpenberg produces approximately 200,000 tonnes of zinc in concentrate annually. Boliden has not declared force majeure, but reduced ore extraction rates will flow through to reduced refined production in the European smelting network that processes Garpenberg concentrate.
On the ground, the physical tightness is visible in exchange inventory data. Shanghai Futures Exchange zinc inventories fell 2.2% week-over-week in the most recent reporting period, and LME on-warrant inventories remain below 100,000 tonnes — less than three days of global consumption. The LME cash-to-three-month spread has intermittently flipped into backwardation, a signal that metal available for immediate delivery commands a premium. Fastmarkets assessed the physical premium for special high-grade zinc in Rotterdam at elevated levels, reflecting European buyer anxiety about winter supply.
StoneX analysts, in a mid-year review, see zinc prices pulling back from current levels later in 2026 as smelter restarts eventually materialize and modest demand growth fails to sustain the deficit narrative. The ILZSG's own demand forecast is conservative: global refined zinc consumption is expected to grow roughly 1.5% in 2026, driven by galvanized steel for construction and automotive applications. A Chinese property downturn would weigh on that number, but infrastructure spending — particularly on power transmission towers, which use heavily galvanized steel — has provided a floor.
The contrasting view comes from more bullish analysts who argue that the ILZSG deficit number understates the true tightness because it does not fully account for concentrate market stress. Treatment charges — the fees smelters charge miners to process zinc concentrate into refined metal — have fallen sharply, indicating that mine supply of concentrate is not keeping pace with smelter demand. Low treatment charges compress smelter margins and, in a market where several smelters are already disrupted, reduce the incentive to restart quickly. This creates a self-reinforcing dynamic: smelter disruptions reduce concentrate demand, which raises treatment charges, but only to a point — and only if alternative smelting capacity exists to absorb the concentrate.
Zinc buyers are in a market where three separate supply disruptions — any one of which would be manageable — have converged to create genuine physical tightness. The Kazzinc disruption alone, at 15,000-20,000 tonnes of lost output per month, exceeds the full-year ILZSG deficit forecast. This is not a theoretical deficit; it is metal that is not being produced, today. For procurement teams in galvanized steel supply chains — construction, automotive, power transmission — the priority should be contract security over price. At $3,614, zinc is expensive relative to the $2,800-3,000 range that prevailed through most of 2025, but the question is not whether the price is high — it is whether it goes higher if Kazzinc and Cajamarquilla fail to restart on schedule. The answer, on current evidence, is yes. Buyers on formula pricing should negotiate floors near $3,200-3,400 for Q4 delivery to protect against a pullback, but accept that premiums may stay elevated even if the LME price eases. Buyers on fixed-price contracts should lock H2 volumes now. The alternative — waiting for a restart that may not come until 2027 for Kazzinc — risks buying at $4,000 or higher if another disruption hits. Diversify sourcing: Southeast Asian smelters in South Korea and Japan have spare capacity and are offering competitive premiums relative to European-delivered metal.