London Metal Exchange zinc prices hit four-year high amid supply crunch

Zinc prices on the London Metal Exchange (LME) have surged to their highest levels in four years, driven by a significant shortage of metal ore and tightening supply. The market is experiencing intense backwardation, with the price gap between immediate delivery and three-month contracts widening significantly as buyers rush to secure physical metal.

This supply crunch is exacerbated by falling treatment charges, which have dropped to as low as negative $110 per ton. This means miners are effectively paying smelters to process ore, a situation that threatens industrial margins and could lead to production cuts. The International Lead and Zinc Study Group (ILZSG) has revised its 2026 outlook from a projected surplus to a deficit of 19,000 tons.

Other base metals have seen mixed movement. While copper faces similar supply pressures and low stocks, other metals like copper and tin saw price increases on August 27, whereas aluminum and nickel experienced slight declines.