LME zinc stable w-o-w as inventories slide below 98,000 t

• LME stocks fall 4%; heavy rains impact Australian concentrate supply
  
  
• Post-holiday SHFE trends remain broadly aligned with LME prices
  
  

London Metal Exchange (LME) zinc prices traded in a relatively narrow range in the week ended 27 February, with modest profit-taking offsetting early strength. Continued inventory drawdowns, reaching below 98,000 t, lent underlying support, though upside momentum remained capped near resistance levels.

Price trends

LME zinc cash prices opened at $3,324/t on 23 February and strengthened to a weekly high of $3,352/t on 25 February. However, prices eased in the latter half of the week to settle at $3,327/t on 27 February, marking a marginal 0.1% w-o-w gain.

The three-month contract followed a similar trajectory, rising from $3,354/t at the start of the week to a weekly high of $3,383.5/t on 24 February before closing at $3,348.5/t on Friday, down around 0.1% w-o-w. The contract approached the $3,380/t zone but failed to sustain momentum toward the $3,400/t level.

Inventory analysis

LME zinc inventories extended their decline through the week, reinforcing signs of tightening visible supply.

Stocks fell from 101,550 t on 23 February to 97,350 t on 27 February, reflecting a substantial weekly draw of 4,200 t (4%). Notably, inventories dropped below the 100,000 t threshold mid-week and continued to slide toward the 97,000 t mark.

The sharper pace of drawdown compared with the previous week suggests continued physical offtake, even as broader price gains remained measured.

On the supply side, heavy rainfall across large inland areas of South Australia, parts of the Northern Territory, Queensland and New South Wales reportedly disrupted freight movement and ore transportation in recent days. Flood warnings and persistent storms have affected logistics in some mining regions, potentially impacting shipments. While the extent and duration of disruption remain unclear, the development adds to near-term supply-side uncertainty, particularly for markets reliant on Australian zinc concentrates.

MCX zinc trends (23-27 Feb)

On the MCX, zinc futures mirrored global cues, trading within a relatively stable yet active band. The active March 2026 contract moved between INR 325,000-332,000/t during the week. Prices opened at INR 327,000/t on 23 February and settled slightly lower at INR 326,000/t on 27 February, down around 0.2% w-o-w.

Trading volumes remained steady, while open interest increased from 3,652 lots at the start of the week to 3,974 lots by Friday, indicating fresh positioning amid range-bound price action.

Domestic supply conditions remained comfortable, with galvanising demand steady but largely need-based.

SHFE zinc trend

Trading on the Shanghai Futures Exchange (SHFE) resumed on 23 February following the Lunar New Year holidays. SHFE zinc opened at $3,517/t and traded within a firm range during the week, touching $3,540/t on 26 February before closing at $3,530/t on 27 February.

The post-holiday return of Chinese participation restored cross-market signals, though price movements remained broadly aligned with LME trends without triggering strong arbitrage flows.

Outlook

In the near term, zinc is likely to consolidate between $3,250-3,400/t. Support is reinforced by the sharp LME inventory draw to 97,350 t and continued visible supply tightening. Potential logistical disruptions in Australia may further underpin sentiment if shipment delays persist, limiting downside below the $3,200-3,250/t range.

However, sustained upside beyond $3,400/t would require continued stock declines exceeding 3,000-4,000 t per week or stronger post-holiday Chinese demand momentum. If inventories stabilise near current levels and buying interest softens, prices could retest $3,300/t. Conversely, further warehouse drawdowns or prolonged supply disruptions could push zinc toward $3,450/t in the short term.