Zinc hits more than four-year high on supply fears

London zinc rose to its highest in more than four years on Tuesday, supported by supply concerns and limited availability outside China. Benchmark three-month zinc on the London Metal Exchange was up 2.29% at $3,972 a metric ton, as of 0300 GMT. Earlier, the contract touched $3,990, its highest since May 2022. The most-traded zinc contract on the Shanghai Futures Exchange was up 2.71% at 27,070 yuan ($4,027.97) a ton. It touched a peak of 27,165 yuan a ton earlier, its highest since January 2026. Falling refined zinc inventories outside China, tight raw material supply and market positioning have driven a strong rally in zinc, helping the metal post its best month since January in August on both the LME and the SHFE. Tight supply outside China has drawn metal out of the country and into overseas warehouses, supporting prices and lowering inventories in those markets. "Domestic (Chinese) inventories saw a sharp drawdown on Monday, with spot purchasing concentrated in deliverable brands," analysts from Chinese broker Jinrui Futures said in a note. Elsewhere, a supply squeeze in raw material zinc concentrate has pressured refiners and prompted some to bring forward their maintenance plans. "September–October output had been expected to rise versus July–August, but owing to the raw material situation, domestic smelters have been adding maintenance plans," the Jinrui analysts said. Zinc concentrate treatment charges are sharply negative due to the supply shortage, meaning refiners are paying miners to process their material. Bullish speculative positions on the LME are at their largest since the second quarter of 2022, according to data from broker Marex. Among LME metals, copper added 0.45%, aluminium gained 0.62%, lead added 0.16%, nickel dipped 0.12% and tin added 0.45%. Among SHFE metals, copper gained 0.5%, aluminium rose 0.63%, lead lost 0.65%, nickel added 0.45% and tin gained 0.93%.