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2026-05-20 21:03:29
[Zinc Prices Surge Against Market Trend as Western Refinery Bottlenecks Shatter Oversupply Expectations] ⑴ Three-month zinc futures on the London Metal Exchange reached $3,633.50 per ton last week, a near four-year high, up 13% year-to-date. This strong performance exceeded market expectations; a January survey by institutions predicted an average price of only $3,041.50 per ton for the second quarter, with the most optimistic forecast at only $3,318. ⑵ Demand is under pressure, with the construction industry accounting for more than half of global zinc consumption, mainly for galvanized steel. However, two supply-side shocks directly triggered the price increase: Glencore's Kazakhstan refinery reduced production after a fatal explosion on May 5, and Nexa Resources subsequently announced the suspension of operations at its Peruvian plant due to a fire. The two plants have a combined annual capacity of approximately 600,000 tons. ⑶ Global mined zinc production is projected to grow by 4.8% year-on-year in 2025 after three consecutive years of decline, but refined zinc production will only grow by 1.7%, with all growth coming from a single market. Western refined zinc production has shrunk due to smelter closures, operational problems, and proactive production cuts driven by low processing fees, resulting in a market characterized by ample supply in some regions and continued tightness in the West. (4) The International Lead and Zinc Study Group predicted a global supply surplus of 85,000 tons in 2025 and a surplus of 271,000 tons this year in October last year. However, the latest assessment shows a slight shortage last year, and a shortage of 19,000 tons is still expected this year. London Metal Exchange registered and over-the-counter inventories total 156,000 tons, an increase of only 21,000 tons since the beginning of the year, far below the peak of nearly 400,000 tons in 2024. Analysts point out that some markets may achieve refined zinc self-sufficiency this year, while the balance in Western markets is more fragile, and the current high zinc prices already reflect this reality.
