Trafigura’s Zinc Withdrawal Sparks Price Surge on LME
Trafigura Group, a major player in the global zinc market, has triggered a rally in zinc prices by ordering the withdrawal of thousands of tons of the metal from London Metal Exchange (LME) warehouses, according to sources familiar with the situation.
Orders for zinc withdrawals surged by 97,225 tons over two days—the largest spike in more than a decade—leaving less stock available for other buyers.
This shortage has supported a 5.5% increase in zinc prices this week, with the metal trading 1.8% higher at $3,129.50 per ton on Wednesday.
Trafigura, which operates zinc smelters and is among the world’s top traders and producers of the metal, was reportedly behind the large-scale orders. The company and the LME declined to comment on the development.
While such large-scale withdrawals are significant, they are not uncommon. Physical traders like Trafigura often move metal in response to supply-demand shifts or to relocate it to cost-effective storage facilities.
Despite subdued demand in the zinc market, supply concerns are growing. Falling processing fees for converting zinc ore into refined metal have strained the global smelting industry, raising fears of potential production cuts.
Although zinc inventories in LME warehouses rebounded earlier this year—bolstered by stockpiles in Singapore, much of which were supplied by Trafigura—the recent withdrawals reduced available inventory to a one-year low of 154,125 tons.
Exchange data revealed that a single entity controlled over half of the readily available zinc stock in LME’s system, amplifying concerns about market availability.
The constrained supply and Trafigura’s actions have pushed zinc prices higher, reflecting the market’s sensitivity to inventory fluctuations and growing uncertainty about production stability.
This latest development highlights the significant influence of major traders like Trafigura on global commodity markets and underscores the ongoing challenges facing the zinc supply chain.
