Zinc Price Forecast: Futures Fall to Two-Month Low Near $3,670 as Chinese Supply and US Dollar Pressure Prices

Zinc futures have fallen to approximately $3,670 per tonne in mid-October, reaching their lowest level since early August. The decline reflects expectations of increased Chinese zinc concentrate availability and renewed pressure from a stronger US dollar. However, tightening production conditions in Western markets and uncertainty surrounding European smelting capacity continue to create a more complex supply outlook.

The market is balancing the prospect of improving Chinese mine output against persistent production constraints elsewhere. While rising Chinese exports are helping ease pressure in the London Metal Exchange (LME) market, backwardation in the benchmark spread indicates that nearby supply conditions remain relatively tight.

Market Snapshot

• Zinc futures: Approximately $3,670 per tonne.
• Price trend: Lowest level since early August.
• Primary downside pressures: Expected recovery in Chinese mine production and a stronger US dollar.
• Western supply risks: Elevated energy costs, tight raw-material availability and uncertainty surrounding Nyrstar’s Budel smelter.
• Market structure: LME backwardation persists despite easing supply tightness.

Zinc Price Action: Selling Pressure Builds Near Two-Month Lows

Zinc has retreated to its weakest level in more than two months as traders reassess the balance between expected supply growth and continuing production challenges.

The anticipated recovery in Chinese zinc concentrate availability is an important factor behind the decline. Mines that were previously disrupted by accidents and safety inspections are expected to resume operations, supporting month-on-month growth in Chinese mine output during October.

A stronger US dollar is adding to the pressure. Because zinc is priced in dollars, a stronger greenback makes the metal more expensive for buyers using other currencies, potentially weighing on demand and commodity investment flows.

The move towards $3,670 per tonne places attention on whether prices can stabilise at current levels or whether expectations of improved supply will encourage further selling.

Chinese Mine Output: Supply Recovery Could Weigh on Prices

China remains central to the near-term zinc outlook. The expected month-on-month increase in October mine production suggests that supply previously restricted by operational disruptions could return to the market.

If production recovers as anticipated and concentrate availability improves, pressure on raw-material supply could ease. This may reduce concerns over feedstock availability and weigh on zinc prices if the additional material is sufficient to offset demand.

However, the expected recovery is not the same as confirmed sustained growth. The scale of the production rebound and its effect on concentrate availability will be important in determining whether Chinese supply becomes a lasting bearish influence.

Western Zinc Production: Supply Risks Remain

Despite the prospect of higher Chinese output, Western zinc production continues to face structural challenges. Production fell by 3.4% year-on-year during the first half of 2026, with elevated energy costs and tight raw-material availability contributing to the pressure.

These constraints could limit the extent to which global supply improves, even if Chinese mine production increases. A weaker production outlook in Western markets may therefore provide an underlying source of support for prices if demand remains sufficiently resilient.

The strategic review of Nyrstar’s loss-making Budel smelter in the Netherlands is another important factor. Any decision affecting the facility could influence future European production capacity and reinforce uncertainty around regional supply.

LME Market Structure: Backwardation Signals Nearby Tightness

Rising Chinese exports have helped ease tightness in the LME market, providing some relief to immediate supply concerns. Nevertheless, the benchmark spread remains in backwardation, a market structure in which nearby metal commands a premium over later delivery.

This indicates that nearby supply conditions remain relatively tight despite the improvement in export availability.

The coexistence of falling outright prices and backwardation highlights the competing forces shaping the zinc market. Traders are responding to expectations of improved future supply, while the physical market continues to reflect some near-term constraints.

If Chinese exports continue to increase and Western supply conditions stabilise, the pressure on the market structure could ease. Conversely, renewed production disruptions or further smelter constraints could sustain nearby tightness.

Bullish Scenario

Zinc could stabilise or recover if Western production constraints intensify, Chinese output disappoints expectations or raw-material availability remains tight. A decision affecting Nyrstar’s Budel smelter that reduces expected European capacity could reinforce supply concerns.

Persistent LME backwardation may also indicate that immediate availability remains a source of support, limiting the extent of further downside if physical demand holds up.

Bearish Scenario

Further losses could develop if Chinese mine output rises as expected, concentrate availability improves and exports continue to ease LME market tightness. A sustained stronger US dollar could add another headwind by making zinc more expensive for international buyers.

If improving supply expectations begin to outweigh concerns over Western production, the market could remain under pressure below recent trading levels.

Zinc Price Forecast: Supply Recovery Versus Production Constraints

The near-term outlook for zinc remains cautious as futures trade around $3,670 per tonne, their lowest level since early August.

The principal bearish risks are a recovery in Chinese mine production and continued US dollar strength. On the other side, reduced Western production, high energy costs, tight raw materials and uncertainty surrounding European smelting capacity could limit supply growth.

The direction of the next sustained move will depend on whether expected Chinese supply increases materialise and whether Western production risks intensify. LME backwardation remains an important indicator to monitor because it suggests that immediate supply conditions have not fully relaxed.

Market Outlook: What to Watch Next

• Chinese mine production: Confirmation of the expected October recovery and its impact on zinc concentrate availability.
• Chinese exports: Whether additional shipments continue to ease tightness in the LME market.
• Western production: Developments in energy costs, raw-material availability and output levels.
• Nyrstar’s Budel smelter: Outcomes from the strategic review and any implications for European zinc production.
• LME backwardation: Whether nearby supply tightness persists or begins to ease.
• US dollar direction: Whether continued dollar strength adds further pressure to dollar-denominated metals.

Currency Hedger View

Zinc price movements can affect manufacturers, industrial buyers and businesses exposed to international metals supply chains. Changes in commodity costs may influence purchasing budgets and working-capital requirements, while exchange-rate fluctuations can further alter the cost of cross-border transactions.

Businesses purchasing zinc or related industrial materials internationally should consider both commodity-price exposure and the currencies in which their suppliers invoice them. Monitoring these risks together can help companies assess the impact of market volatility on margins and cash flow.

Currency Hedger monitors foreign exchange markets alongside broader commodity and macroeconomic conditions, helping businesses assess and manage their international currency exposure.

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Analysis: Louis Roche, Today Markets

Disclaimer: This article is for informational and educational purposes only and does not constitute investment, trading or financial advice. Commodity markets are volatile, and forecasts are conditional rather than guaranteed. Always conduct independent research and consider the risks before making financial decisions.

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