The price of zinc on the London Metal Exchange rose to its highest level in more than four years amid shrinking available reserves and risks of production disruptions in major supplier countries.
The price of the metal settled at around $3.82,000 per tonne on August 21, up about 2% on the day. Quotes climbed even higher during trading, renewing their high since mid-2022.
Zinc is up about 6.5% over the past month and more than 36% over the year, making it one of the fastest-rising base metals.
The main driver of growth remains physical market tension. LME zinc inventories fell below 100,000 tonnes, and the spread between spot and three-month futures widened significantly, indicating increased demand for the available metal. According to the Shanghai Metals Market, on August 20, LME stocks were about 94.4 thousand tons.
Additional pressure on supply is exerted by production problems. Heavy rains and floods in some regions of China have created risks for mining and metallurgical enterprises. Adjustment of production volumes at one of the fields in the southwest of the country may reduce the August output of concentrate by approximately 1 thousand tons, and maintenance of one of the enterprises in Central China — the production of refined zinc by another 1–1.5 thousand tons.
Decreases in production are also recorded by large international companies. Glencore's own zinc production fell in the first half, Boliden's concentrate output fell compared to the previous quarter, and MMG reported a year-on-year decline in second-quarter output.
Zinc is primarily used to galvanize steel and protect metal structures from corrosion, so demand for it is closely linked to construction, automotive and infrastructure investment. Additional long-term drivers are renewable energy and new energy storage technologies.
At the same time, a high price can stimulate the recovery of production and supplies. Previously, the market was under pressure for several years after the price peak in 2022, which led to the closure or conservation of some less profitable capacities.
Experts Club previously published a ranking of the largest zinc producers based on data from the USGS and the International Lead and Zinc Study Group. According to the results of 2024, China was the leader with about 4 million tons, followed by Peru — 1.3 million tons and Australia — 1.1 million tons.
