Zinc near four-year highs on supply squeeze, lifting LatAm miners
A collapse in treatment charges to $85 a tonne highlights a supply deficit that is feeding directly into the margins of Latin American zinc producers, even as construction demand falters.
London Metal Exchange spot zinc is holding around $3,529 a tonne, hovering just below four-year peaks. The rally is being driven almost entirely by supply constraints rather than a demand surge, with the 2026 annual treatment charge benchmark collapsing to just $85 a tonne. This historically low fee paid by miners to smelters signals severe concentrate tightness and is transferring margin upstream to mining operations.
The fundamental backdrop supports the elevated pricing. Global refined zinc demand rose 1.9% to 13.86 million tons in 2025, but production only managed a 2.1% increase, leaving the market in a 33,000-ton deficit. Disruptions at Kazakh smelters and persistent issues at European mines have compounded the tightness, leaving exchange inventories low and smelter margins severely compressed.
Latin American producers are translating this environment into tangible financial gains. Nexa Resources, the region's purest zinc proxy, saw its shares climb 6.66% to $12.82 in the latest session. The company mined 79,000 tonnes of zinc in the first quarter of 2026, an 18% year-on-year increase driven by record output at its Aripuanã mine and recovering Brazilian smelters. With 2025 production at 316,000 tonnes, Nexa has guided for a further 6% increase this year.
Diversified Peruvian miner Buenaventura is also capturing the upside, with shares rising 3.96% to $31.25. The company locked in an average realised zinc price of $3,451 per metric ton in the second quarter of 2026. While Buenaventura's equity trajectory is also influenced by its gold, silver, copper and lead output, its zinc revenues are clearly benefiting from the pricing floor.
The immediate risk to these equity gains lies on the demand side. While consumption in China, India, the US and Europe pushed the global balance into deficit, demand actually contracted in Brazil and Peru. Galvanised-steel and construction orders remain soft in parts of the Americas and Asia. Until that end-user demand picks up, zinc is likely to remain range-bound at these elevated levels rather than breaking decisively higher.
