10/29/2025
EU - PREMIUMS FALL AMID LIMITED SPOT TRADING AND FLAT DEMAND
European zinc premiums dipped in week to Tuesday October 28, amid limited spot trading, with demand showing no signs of improving even as traders keep a wary eye on low stock levels in London Metal Exchange warehouses, according to market participants.
Spot trading in Europe has remained muted and demand for the galvanizing metal has flatlined with limited prospects for a pick-up this year, traders said.
The lack of activity comes despite a slight rise in the LME zinc price and last week's tightening of the cash-to-three-month spread in recent weeks to a backwardation above $300 per tonne.
Suppliers are offering metal at a discount to offload stock and the backwardation is making it costly for some trading houses, particularly smaller ones, to keep hold of stock, traders said.
“It is costing us extremely highly to hold units,” a trader told . “Those with units are trying to get rid of them, but there are not many buyers in the market right now.”
LME zinc stocks rose marginally to 35,250 tonnes on Tuesday after some deliveries trickled into exchange warehouses in Malaysia and Hong Kong.
There are also about 11,800 tonnes of the metal held outside LME warehouses, according to LME data, with most in warehouses in Asia.
While off-warrant zinc stocks are not huge, traders are hardly struggling to get material because demand has flatlined and there are fewer buyers, another trader said.
“It’s not an issue to get a thousand tonnes,” the trader said. “But I'm not saying there's a glut of metal out there. If demand improves, the zinc market might get tighter.”
The lack of demand means that sellers would have to “concede” on the premium, a third trader said.
