European zinc premiums stay stable as LME stocks decline

European Zinc

European zinc premiums remained stable this week even as LME stocks fell further and demand stayed muted. Market participants report that European zinc premiums for special high-grade (SHG) material are caught between weak spot consumption and tightening warehouse inventories. As a result, the regional zinc market is balanced more by opposing forces than by any clear bullish or bearish trend.

Weak demand offsets tightening LME zinc stocks

Spot demand for SHG zinc in Europe remains subdued as industrial activity stays soft across core consuming sectors. However, lower buying interest has prevented European zinc premiums from reacting more strongly to the latest drawdown in exchange inventories. Buyers feel little urgency to chase units, even as visible stocks trend lower.

At the same time, LME three-month zinc prices show only modest movement. Prices settled at $2,930/t, down just 0.71pc week on week, underlining the market’s cautious tone. Meanwhile, LME zinc stocks fell another 6.63pc to 46,825t, tightening the buffer of readily available metal. Therefore, investors and physical traders are watching whether continued stock draws eventually push European zinc premiums higher if demand recovers.

New South African copper-zinc supply on the horizon

Supply-side developments also matter for long-term zinc balance. Australian developer Orion Minerals recently signed a non-binding term sheet with Glencore for up to $250mn in financing. The funds will support development of the Prieska copper-zinc mine in South Africa’s Northern Cape, alongside long-term concentrate offtake.

Prieska holds 31mn t grading 1.2pc copper and 3.6pc zinc, with a planned two-phase mine life of 13.2 years. Steady-state output is targeted at 65,000 t/yr of zinc and 30,000 t/yr of copper, which will add a meaningful new stream of concentrates into global flows once in production. As a result, prospective new supply such as Prieska could eventually ease tightness in refined markets and influence future European zinc premiums.

The Metalnomist Commentary

Europe’s zinc market is in a stand-off between demand weakness and steadily falling LME inventories. The next decisive move in European zinc premiums will likely depend on whether macro demand recovers first or new concentrate supply, like Prieska, arrives fast enough to cap any tightening. For now, physical players are managing exposure carefully, treating stability as temporary rather than structural.