HSBC's Global Commodity Team warned Thursday that the zinc market is flashing warning signs of extreme tightness:

Global zinc mine supply remains tight: HSBC's Global Commodity Team expects global mine supply to fall 2.1% y-o-y to 12.5mt in 2026, driven mainly by lower production in Latin America.

The zinc market is expected to be slightly tight in 2026e, driven by a modest recovery in demand in Europe and North America amid supply disruptions at smelters and mines.

Overall, concentrate supply remains tight, and there have been smelter disruptions as well. Zinc demand has held up.

Here's where the physical tightness is emerging: Zinc for immediate delivery on the London Metal Exchange traded at a premium of as much as $132.37 a ton over three-month futures Thursday, the widest backwardation this year.

The spread signals intensifying competition for readily available metal in warehouses. Benchmark zinc rose 1.1% to $3,802 a ton earlier today, putting it on course for a fifth weekly gain and its highest close in four years.

Analysts from Chinese brokerage Jinrui Futures Co. wrote in a note, "There are still concerns about overseas supply disruptions in zinc," adding, "So the driving forces for the relative strength of the LME price continue to exist, together with heightened volatility around macroeconomic sentiment."

Beyond zinc, veteran commodities strategist Jeff Currie wrote in a series of X posts Thursday that the convergence of tight physical markets, currency debasement and policy intervention represents the hallmark of a structural commodity bull cycle.

Quantix Commodity Index

Currie told his followers to "Get long and buckle up: the next leg of the ride will see more vol with higher highs across more markets."

Read the report here.