Zinc price hits two-week high as tight stocks spur bullish sentiment

Zinc jumped to its highest in two weeks on Monday as falling inventories and rising power prices boosted sentiment on the metal used to galvanise steel.

Benchmark three-month zinc CMZN3 on the London Metal Exchange was up 2.1% at $3,821.50 a metric ton as of 1700 GMT, having earlier hit $3,825, its highest since October 12.

“Zinc sentiment appeared neutral to modestly bullish,” Citi said in a post-LME Week note. “While mine supply is likely to grow in 2027, some participants think the market remains too optimistic on the scale of growth given underperformance of recent years.”

The global refined zinc market swung to a deficit of 3,900 tons in August from a surplus of 27,500 tons in July, data from the International Lead and Zinc Study Group showed.

Zinc was being supported by high power prices, declining production in Peru and a drawdown in inventories, one trader said.

Shanghai Futures Exchange zinc stocks ZN-STX-SGH fell 5% from the previous week to 137,139 tons, the lowest since March, data from the bourse showed on Friday. Available, or on-warrant LME zinc inventories MZNSTX-TOTAL were at 133,700 tons.

“Although low treatment charges have not led to meaningful refined production cuts in China, the country does not export enough zinc units, beyond occasional export spikes, which should continue to support zinc prices,” Bank of America said in a note.

The cash LME zinc contract was at a roughly $104 a ton premium over the three-month forward CMZN0-3, pointing to near-term tightness.

Elsewhere, copper edged up 0.1% to $14,341 per ton, with little impact from a strike at Teck Resources’ TECKb.TO Highland Valley copper mine.

The Yangshan premium SMM-CUYP-CN, a gauge of China’s appetite for imported copper, hit $178 a ton, its highest since 2014, after ShFE copper stocks CU-STX-SGH fell more than 25% to 54,356 tons.

The rest of the complex was mixed. Aluminium CMAL3 dipped 0.2% to $3,038.50 and nickel CMNI3 fell 1.7% to $15,570, while tin CMSN3 gained 0.7% to $50,885 and lead CMPB3 added 0.8% to $1,922.50, touching its highest since September 28 after large orders to withdraw metal from Singapore last week.

(Reporting by Tom Daly; additional reporting by Solomon Cefai in Singapore; Editing by Vijay Kishore, Jonathan Ananda and Diti Pujara)