Zinc hits more than four-year high on supply fears

Among LME metals, copper CMCU3 added 0.45%, aluminium CMAL3 gained 0.62%, lead CMPB3 added 0.16%, nickel CMNI3 dipped 0.12% and tin CMSN3 added 0.45%.

Among SHFE metals, copper SCFcv1 gained 0.5%, aluminium SAFcv1 rose 0.63%, lead SPBcv1 lost 0.65%, nickel SNIcv1 added 0.45% and tin SSNcv1 gained 0.93%.

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.

London zinc rose to its highest in more than four years on Tuesday, supported by supply concerns and limited availability outside China.