Zinc futures on the Shanghai Futures Exchange have risen for the third consecutive session, reaching their highest price in over a month. The most active zinc contract (SZNcv1) closed 1.5% higher at 24,000 yuan ($3,363.18) per metric ton, marking a significant increase from the four-month low of 21,780 yuan set on August 8.
This price rally is driven by expectations of reduced supply and a seasonal increase in demand. Zinc prices have climbed 5.3% this month alone, with open interest in the contracts also rising by 12% to 126,000 lots, equivalent to 630,000 tons.
The surge is largely attributed to an agreement among 14 major Chinese zinc smelters to cut production in response to falling treatment charges (TCs), which have reached historical lows due to tight supply. Analysts report that China’s zinc output fell by 9.2% in July, reaching 536,000 tons—the lowest monthly level in a year.
Looking ahead, analysts at Zijin Tianfeng Futures predict that production cuts could range from 30,000 to 40,000 tons each month from September to December, translating to a total reduction of 3-4% of the annual zinc ingot output.