Key Facts
- LME cash zinc settled at US$4,107 per tonne on Wednesday, August 26, 2026, up about 3% from Tuesday’s US$3,987, leaving a US$174 backwardation against the three-month contract at US$3,933 as nearby metal stayed scarce.
- The zinc complex jumped on the day with the three-month contract rising from US$3,853 to US$3,933 as the squeeze in deliverable units intensified.
- Nexa Resources shares fell 1.52% to US$15.58 in New York trading while Peru’s Buenaventura rose 0.67% to US$36.18, splitting Latin American miner proxies on the session.
- LME zinc inventories rose 2,275 tonnes to 97,325 tonnes an increase on the day but still a low absolute level that supports the tightness narrative.
- Nexa’s Cajamarquilla smelter outage cut about 7,000 tonnes of refined zinc in Q2 2026, roughly 2% of expected full-year output, but the company says full-year guidance is unchanged.
- Nexa produced 79,000 tonnes of zinc from mining in Q2 2026 up 8% year on year, with Aripuanã in Brazil setting a quarterly record earlier in the year.
Today’s Focus
Zinc jumped above US$4,100 per tonne in London on Wednesday, August 26, 2026, as a widening US$174 backwardation between cash and three-month LME contracts showed buyers paying up for prompt metal. Cash zinc settled at US$4,107, up from US$3,987 on Tuesday.
Latin America’s two main zinc proxies diverged. Nexa Resources, the Brazil and Peru miner-smelter, dropped 1.52% to US$15.58 in New York. Peru’s Buenaventura added 0.67% to US$36.18, helped by its precious metals exposure and steady zinc output from Uchucchacua.
Physical signals pointed to firm demand for galvanised steel in construction and infrastructure. LME zinc stocks rose 2,275 tonnes to 97,325 tonnes, but that remains thin historically, leaving the market vulnerable to any fresh supply interruption.
Nexa’s guidance for 2026 projects consolidated zinc production up about 6% versus 2025, with Aripuanã expected to jump about 49%. The company assumes a zinc benchmark treatment charge of about US$175 per tonne of concentrate.
What matters today. The backwardation, wider even after a 3% price jump, is the real story: buyers are paying a premium for zinc they can get now, which tells you physical supply is tighter than the headline number suggests.
01 The session in one read
Zinc jumped on Wednesday, August 26, 2026, and the shape of the market told an even tighter story. LME cash zinc settled at US$4,107 per tonne, up about 3% from US$3,987 on Tuesday, while the three-month contract rose to US$3,933 from US$3,853.
That gap of US$174, known as backwardation, means prompt metal costs more than future delivery. Buyers needing zinc now are paying a premium, which typically happens when warehouse availability is thin or demand for immediate units is unusually strong.
LME cash zinc at US$4,107 versus US$3,933 for three-month delivery shows a US$174 backwardation, a classic signal that users need metal immediately and are willing to pay up for it. Nexa’s Cajamarquilla restart and unchanged full-year guidance remove one overhang, but inventories near 97,000 tonnes leave little buffer. Watch whether LME zinc stocks keep rising or reverse lower next week.
02 The board
The day’s jump of about 3% came alongside a rise in LME inventories to 97,325 tonnes, up 2,275 tonnes on the session — a build that has yet to loosen the nearby market, with cash metal still commanding a US$174 premium over three-month delivery.
Nexa Resources, the Brazilian-Peruvian zinc miner and smelter, fell 1.52% to US$15.58 in US trading. Buenaventura, the Peruvian polymetallic producer, moved the other way, rising 0.67% to US$36.18 as investors weighed its gold and silver exposure against its zinc output.
| Asset | Level | Change |
|---|---|---|
| Nexa Resources | US$15.58 | -1.52% |
| Buenaventura | US$36.18 | +0.67% |
Source: RT close, 2026-08-26. Where a commodity has no spot feed, an exchange-traded tracker or leading producer is shown as a labelled proxy.
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Latin America — Cross-Market Board
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 174,586.26 | +0.01% | +21.85% | 174,576.80 | 168,310 | 167,142 | — |
| IPSA | 11,369.18 | -0.71% | — | 11,450.75 | 11,210 | 10,984 | 1,513,213,483 |
| IPC MEX | 66,644.91 | +0.53% | +12.17% | 66,293.07 | 66,121 | 65,405 | 108,886,187 |
| MERVAL | 3,024,971 | +0.53% | +30.51% | 3,022,485 | 3,042,365 | 2,991,150 | — |
| COLCAP | 2,504.68 | -0.15% | — | 9.04 | 9.05 | 9.02 | 4,133 |
| BVL PERÚ | 60,449.35 | +0.30% | — | — | — | — | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| EUR/BRL | 5.95 | +1.01% | -5.83% | 5.89 | 5.98 | 5.94 | — |
| USD/MXN | 17.06 | -0.24% | -8.58% | 17.10 | 17.08 | 17.01 | — |
| USD/CLP | 913.98 | +0.04% | -5.67% | 913.65 | 915.11 | 906.68 | — |
| USD/COP | 3,140 | +0.03% | -22.04% | 3,139 | 3,141 | 3,105 | — |
| USD/PEN | 3.36 | -0.66% | -4.82% | 3.38 | 3.38 | 3.35 | — |
| USD/ARS | 1,493 | +0.10% | +12.96% | 1,491 | 1,494 | 1,480 | — |
| USD/UYU | 40.27 | +1.24% | +1.80% | 39.77 | 40.27 | 40.23 | — |
| USD/PYG | 5,939 | +1.68% | -19.54% | 5,841 | 5,939 | 5,925 | — |
| USD/BOB | 11.64 | -0.76% | +72.04% | 11.73 | 11.72 | 11.64 | — |
| USD/DOP | 58.34 | +1.25% | -3.44% | 57.62 | 58.34 | 58.04 | — |
| USD/CRC | 445.92 | +0.89% | -9.71% | 441.97 | 448.50 | 445.92 | — |
03 What moved it
The backwardation was driven by a physical market where users of galvanised steel and construction materials are competing for nearby zinc units. Galvanising remains the dominant use of zinc, protecting steel from corrosion in building frames, power towers and transport projects.
Supply tightness from Latin America reinforced the squeeze. Nexa’s Q2 2026 zinc output of 79,000 tonnes from mining rose 8% year on year, but smelting volumes were hit by a May incident at its Cajamarquilla plant in Peru that cost roughly 7,000 tonnes of refined metal.
Nexa said electrolysis lines at Cajamarquilla were fully operational by late May and casting lines were progressively restarted through June. The company has kept its full-year 2026 refined zinc sales guidance unchanged and plans to recover the lost volume in the second half.
04 The Latin American read
Peru, Bolivia and Mexico are anchor suppliers to global zinc markets, feeding concentrates to smelters in Europe and Asia. Nexa’s 2026 guidance projects consolidated zinc production up about 6% versus 2025, helped by Aripuanã, Atacocha and Vazante, but partly offset by lower grades and mine sequencing at Cerro Lindo and El Porvenir.
Aripuanã in Brazil has become a bright spot, setting a quarterly zinc production record of 13,000 tonnes in Q1 2026. Nexa expects Aripuanã to grow about 49% in 2026 as plant operations stabilise and mining volumes rise, with guidance of 45 to 60 thousand tonnes from that asset alone.
Buenaventura’s zinc output, largely a by-product at Peruvian mines such as Uchucchacua, keeps it a smaller but meaningful proxy for the metal, with its cash flow directly linked to the same London market moves traders were watching on Wednesday.
05 The names to watch
Nexa Resources is the purest Latin American zinc play for global investors, combining mining in Peru and Brazil with smelting and refining. Its Cajamarquilla restart and unchanged guidance remove a key uncertainty, but treatment charges of about US$175 per tonne remain a cost pressure to watch.
Buenaventura offers a blended exposure, where zinc output from Uchucchacua and Tambomayo sits alongside gold, silver and copper production. Its share price can decouple from zinc when precious metals move, as the 0.67% gain against Nexa’s 1.52% fall illustrated.
06 The outlook
The US$174 backwardation suggests the physical zinc market has not yet loosened despite the increase in LME stocks. If inventories resume their decline or Cajamarquilla’s restart hits any snag, the premium for prompt metal could widen further.
Nexa’s ability to recover the roughly 7,000 tonnes lost in Q2 will matter for refined supply into year-end. The company has stayed confident, but analysts will be checking third-quarter smelting volumes to confirm that the recovery is on track.
07 What to watch
- LME zinc stock changes: Whether inventories at 97,325 tonnes rise again or fall will confirm whether the backwardation is temporary or structural.
- Cajamarquilla restart progress: Nexa says full-year guidance is unchanged; third-quarter refined output will show if the 7,000-tonne Q2 loss is truly recoverable.
- Chinese construction demand: Galvanised steel for infrastructure remains zinc’s main demand driver; any slowdown in Asian building activity would pressure prices.
- Treatment charge negotiations: Nexa’s assumed 2026 benchmark of about US$175 per tonne affects miner margins; moves in annual deals will signal smelter appetite for concentrate.
Frequently Asked Questions
What is zinc backwardation?
It is when cash zinc costs more than zinc for delivery in three months. On Wednesday, cash settled at US$4,107 against US$3,933 for three-month, a US$174 backwardation that signals tight nearby supply.
Why did Nexa shares fall on Wednesday?
Nexa Resources dropped 1.52% to US$15.58 even as zinc prices jumped about 3%, likely reflecting investors locking in gains after a strong run or concern about smelter costs after the Cajamarquilla outage in May.
How much zinc does Nexa produce?
Nexa mined 79,000 tonnes of zinc in Q2 2026, up 8% year on year. Total zinc metal and oxide output from smelters was 125,000 tonnes, down 10% after the Cajamarquilla incident.
What role does Peru play in zinc supply?
Peru is one of the world’s top zinc producers. Nexa and Buenaventura both operate Peruvian zinc mines, with Buenaventura producing zinc as a by-product at mines such as Uchucchacua.
Market data: RT
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