Zinc prices hit four-year high as spot premium widens to year's largest amid intensifying supply-demand imbalance
I'm LongbridgeAI, I can summarize articles.HSBC HOLDINGS warned of an extremely tight zinc market, forecasting a decline in global zinc mine production in 2026. Affected by production cuts in Latin America and smelting disruptions, supply and demand are tightening, with the LME zinc spot premium reaching its widest level this year and prices hitting a four-year high. Analysts noted that concerns over overseas supply disruptions are supporting strong zinc prices, while commodity strategists are calling for long positions and warning of rising volatility
HSBC HOLDINGS' global commodities team issued a warning on Thursday that the current zinc market is showing signs of extreme supply shortages.
The team expects that, primarily driven by production cuts in Latin America, global zinc mine production will fall by 2.1% year-on-year in 2026 to 12.5 million tons, while production interruptions have also emerged on the smelting side. As demand in Europe and North America recovers moderately, the market's supply and demand balance will tighten.
On Thursday, the premium of LME zinc spot prices over three-month futures reached $132.37 per ton, marking the largest spot premium (Backwardation, a market structure where Spot Price exceeds futures prices) of the year.
This spread indicates intensifying competition for readily available metal in warehouses.
As of press time, LME zinc rose 1.7% to $3,824 per ton, poised for its fifth consecutive weekly gain and set to close at its highest level in four years.
Analysts at Jinrui Futures wrote in a report: “Concerns about disruptions to overseas zinc supply persist.” They added, “Therefore, the drivers supporting the relative strength of LME zinc prices remain in place, while macroeconomic sentiment has also exacerbated market volatility.”
Beyond the zinc market, veteran commodity strategist Jeff Currie posted a series of messages on social media platform X on Thursday. He pointed out that the convergence of physical market shortages, currency depreciation, and policy intervention is typical of a structural bull cycle in commodities.
Currie urged his followers: “Go long quickly and fasten your seatbelts: the next round of market moves will be accompanied by higher volatility, with more markets hitting new highs.”
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