Key Highlights

  • Zinc futures climbed above $3,780 per tonne, the highest level since June 2022.
  • Heavy rainfall and flooding in China threatened mining and smelting activity, with production adjustments expected to reduce concentrate output by around 1,000 tonnes in August.
  • Glencore reported a 21 percent year-on-year decline in own-sourced zinc production in the first half of 2026, while Boliden's zinc concentrate output fell 16.8 percent quarter-on-quarter.
  • LME zinc inventories have fallen to their lowest level since December, indicating tight near-term availability.

Chinese Flooding Threatens Mining and Smelting Activity

Zinc futures climbed above $3,780 per tonne, the highest level since June 2022, amid tightening supply conditions and concerns over production disruptions in China, the world's largest zinc producer. Heavy rainfall and flooding hit parts of China, threatening mining and smelting activities, with production adjustments at a zinc mine in Southwest China expected to reduce concentrate output by around 1,000 tonnes in August, while routine maintenance at a smelter in Central China could lower refined output by 1,000 to 1,500 tonnes.

Major Producers Report Sharp Output Declines

Supply constraints have also emerged among other major producers outside China. Glencore reported a 21 percent year-on-year decline in own-sourced zinc production in the first half of 2026, while Boliden's zinc concentrate production dropped 16.8 percent quarter-on-quarter and MMG's output fell 1 percent year-on-year in the second quarter, together painting a picture of broad-based supply tightness across the industry.

Falling Inventories Signal Tight Near Term Availability

LME zinc inventories have fallen to their lowest level since December, a signal that available above-ground supply is becoming increasingly scarce even as demand remains steady. This inventory drawdown, combined with the production disruptions in China and declining output from several of the world's largest producers, has reinforced the metal's rally to its highest level in over four years.

Conclusion

Zinc's climb to a four-year high reflects a genuine supply-side squeeze rather than a demand-driven rally, with disruptions spanning China's flooding-affected operations and production shortfalls at several of the world's largest mining companies. With LME inventories already at their lowest since December, the metal's price trajectory may remain highly sensitive to any further supply setbacks, particularly if Chinese weather disruptions extend beyond the current production adjustments already announced.