Supply Surprise: Zinc's 2026 Deficit and What it Takes to Close the Gap

Expectations versus reality

The 2026 zinc forecast was based on numbers, with global production seeing a significant recovery through 2025 to early 2026. More often than not, higher production results in the market loosening.

But while metal production and supply are related, they do not always move in direct proportion. They are also not the sole elements in the equation, as mine concentrate needs to undergo processing or smelting.

In May 2026, two zinc operations experienced major accidents.

Mining giant Glencore's (LSE:GLEN,OTCPL:GLCNF) Kazzinc smelter in Kazakhstan saw an explosion, while Nexa Resources' (NYSE:NEXA) Cajamarquilla plant in Peru was temporarily suspended following a fire incident. These events led to a total loss of roughly 600,000 MT of annual smelting capacity.

Aging large mines also played a role in the surprise deficit. Glencore reported a production drop from 213,600 MT in the first quarter of 2025 to 176,900 MT in the first quarter of 2026, a decrease it attributed to the closure of its Lady Loretta mine in Australia in late 2025. Teck Resources (TSX:TECK.A,TECK.B,NYSE:TECK) recorded a production decrease of 117,000 MT to 106,000 MT in the same period. The company revealed that lower grades have been showing at its Red Dog mine in Alaska, a project that is expected to run until 2031.

On a global scale, zinc concentrate flows were affected by the Middle East conflict.

Reports found that disrupted Gulf shipping raised concerns for Iranian zinc concentrate flows to China, which made up over 5 percent of China's total concentrate imports in 2025.

“The disruption is modest in global terms, but its speed underlines the fragility of concentrated trade routes. Smelters are watching the situation closely as the supply gap widens,” said Jonathan Leng, principal analyst of zinc markets at Wood Mackenzie, adding how the Glencore and Nexa accidents introduce another layer of complication.

Combined, these events and facts demonstrate the value of proximity and control over one’s supply chain, a competitive advantage in today’s zinc environment.

Thin inventories and treatment charges

Two numerical factors count significantly more than others in this zinc scenario: thin inventories and collapsing treatment charges. Crux Investor outlines that London Metal Exchange zinc inventories fell to 95,000 MT in August 2026, while spot treatment charges collapsed to less than US$100, to approximately US$60 per dry MT.

The explanation is that smelters aren't earning enough from processing fees to offset their high energy costs. This means that many have less incentive to run at full capacity despite rising zinc prices, a clear sign of how scarce raw material has become. As for inventories, the lower levels translate to an unusually small buffer for emergency cases. This makes the market even more fragile, since one holder's decisions could sway prices sharply.

“A sustained Shanghai Futures Exchange (SHFE) inventory build alongside LME stocks above 95,000 tonnes would weaken the deficit case,” Crux Investor adds, highlighting how SHFE inventories actually jumped by 2.1 percent.

China remains the world’s largest zinc market, accounting for 33 percent of global output as of recent estimates. Its inventory rise could eventually spill over should refined output find its way into international markets.

Mining the gap

Global annual zinc demand currently stands at around 20 million MT, which could be increased by the energy transition to as much as 0.7 to 1.5 million MT by 2030.

Zinc ranks as the fourth most-produced metal in the world, with roughly 60 percent used for galvanizing steel. Given the growing need for steel for the construction of high-demand infrastructure such as data centers and manufacturing plants, zinc’s sustained tightness poses implications across a wide range of activity across varying sectors. This also includes solar power, which is expected to drive zinc demand up to 800,000 MT by 2040.

When a resource is this important, the natural response is to look toward new sources. This is where projects in mineral-rich jurisdictions and past-producing districts with abundant zinc come in. The idea is that bringing these online potentially allows the market to address the gap immediately, without needing to wait for permitting and infrastructure to catch up.

In Canada, zinc metal is produced at refineries in BC and Québec.

Natural Resources Canada states that refined zinc production is higher compared to mined production since concentrates are imported for processing, notably from Alaska to BC.

Apex Resources and the historic Jersey-Emerald

Apex Resources' fully owned Jersey-Emerald property checks all the important boxes.

Located near the town of Salmo, in Southeastern BC, the 17,500 hectare Jersey-Emerald property hosts the past-producing Jersey lead-zinc mine. As BC's second largest historic zinc mine, Jersey held a historical, daily production record of 2,400 MT between 1949 and 1970.

Jersey-Emerald sits 45 kilometers by highway from Teck Resources’ lead-zinc smelter in Trail, BC, a proximity that allows the property to benefit from excellent infrastructure. It also draws on a skilled mining labor pool from the nearby towns of Salmo, Nelson, Trail and Castlegar, the same communities that supported decades of historic production.

Apex Resources reported that assays from its 2025 drill program intersected zinc mineralization, including 11.3 percent zinc over 0.8 meters and 3.16 percent zinc over 3.3 meters, with exploration to continue.

The company added that it will also further explore tungsten zones on the property, which also includes the historic Emerald tungsten mine, Canada's second largest historic tungsten producer. This provides exposure to multiple critical minerals within a single land package, increasing the project’s value as governments and markets turn to domestic access to critical minerals.

Investor takeaway

Zinc's 2026 deficit story is a reminder that there is both strength and sadly, fragility in numbers. Relying on the usual, existing suspects may not always work, as supply could be one major shock away from a massive dip.

Historical, infrastructure-connected districts and projects offer investors a way to gain exposure to a market where new, readily developable supply is increasingly valuable. Assets like Apex Resources' Jersey-Emerald property stand to contribute to the boost the zinc landscape needs, building immunity to further shocks and offering the kind of aid essential to keep the supply chain running.

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