- Roughly half of mined zinc is used to galvanize steel against corrosion.
- Zinc prices are sensitive to visible warehouse inventories on the London Metal Exchange (LME) and Shanghai Futures Exchange.
- Low and falling inventories often coincide with rising prices, all else equal.
What is zinc used for?
Roughly half of mined zinc is used in galvanizing steel to prevent corrosion. The rest goes into die casting alloys, brass and bronze alloys, batteries, and chemicals. The galvanizing share links zinc demand to construction, automotive, and infrastructure cycles.
Why warehouse inventories move the price
Visible warehouse stocks on the LME and Shanghai Futures Exchange are the most observable inventory measure in the zinc market. When stocks fall and physical demand is firm, the market tightens and prices rise. When stocks build, the market loosens and prices generally fall.
Supply concentration
China, Peru, Australia, and the United States are the largest mine producers of zinc. Many zinc mines are byproduct or coproduct operations alongside lead, silver, and sometimes copper. Smelting is highly concentrated in China.
Treatment charges as a market signal
Smelters charge mines a treatment charge (TC) to refine concentrate into metal. The annual benchmark TC is widely watched because it reflects the balance between concentrate supply and smelter capacity. A rising TC suggests a concentrate surplus.
Implications for investors
Anyone analyzing a zinc producer or junior should track LME inventories, Chinese physical premiums, and benchmark treatment charges. Together they describe whether the market is tight or oversupplied in close to real time.
Frequently asked questions
Inventory dynamics and demand split are documented by the International Lead and Zinc Study Group and the London Metal Exchange.