Base metals have quietly become one of the standout trades on the ASX this year, and zinc is leading the charge. The metal has surged to its highest level in more than four years as Western warehouses run down to levels not seen since 2023, catching a market that spent early 2026 forecasting a surplus completely wrong footed. For Australian investors, the rally is landing at a useful moment, with diversified producers like Aurelia Metals just posting their strongest financial year in over half a decade and reinstating a dividend for the first time since 2020.
Zinc’s Rally to a Four-Year High
Three month zinc on the London Metal Exchange pushed through US$3,990 a tonne in early September, its best level since mid-2022, extending a rally that Bloomberg attributes to a squeeze on physical metal rather than a straightforward demand story. LME registered stockpiles have collapsed roughly 64 percent since December 2024, and a large chunk of what remains is tied up in cancelled warrants awaiting load out, leaving little freely available metal in London. The tightness is geographically lopsided too. China is sitting on comfortable inventory, but the west is short, and the price is set in London, not Shanghai.
Aurelia Metals Rides the Base Metals Upswing
Few ASX companies illustrate the sector’s turnaround better than Aurelia Metals. The Cobar basin producer, which runs the Peak gold copper operation alongside the Hera and Federation zinc lead silver mines in New South Wales, posted FY26 revenue of $480.2 million, up 40 percent on the previous year, with statutory net profit after tax climbing 69 percent to $82.7 million. Cash on hand rose to $143.9 million, and the board declared a fully franked final dividend of 1 cent per share, its first payout since 2020, detailed in the company’s own investor centre release. Stronger silver and lead credits from Hera and Federation have lifted the economics of what was recently viewed mainly as a gold story, a dynamic our coverage of silver’s 20 percent August surge also touched on.
A Structural Supply Story, Not Just a China Story
The International Lead and Zinc Study Group has swung its 2026 global balance forecast dramatically, moving from a projected 271,000 tonne surplus to a small deficit, a roughly 300,000 tonne shift in a matter of months. Smelter feed has been the bottleneck, with concentrate shortages, mine disruptions and processing outages in several regions cutting into refined output even as underlying demand has stayed unremarkable. Our earlier look at zinc’s four year high and the divergent lead market flagged this concentrate squeeze building through the middle of the year, and it has only intensified since.
The Australian Export Outlook
The federal government’s most recent Resources and Energy Quarterly forecasts Australia’s zinc export earnings easing to around $4.1 billion in 2025 to 26 before drifting lower as prices normalise, even as spot prices currently sit well above the department’s earlier assumptions. That gap between forecast and spot price is the kind of upside surprise that flows through to producer cash flow and, as Aurelia has just shown, dividend capacity.
What It Means for ASX Base Metals Stocks
The broader base metals complex has moved in sympathy with zinc, with copper, aluminium and tin all firmer through August, a trend our coverage of copper’s own record breaking run detailed in more depth. For ASX investors, the read through is that diversified miners with genuine zinc, lead or silver by product exposure, rather than pure play explorers, are best placed to capture the current pricing environment while it lasts. Producers like New Century Resources, which reprocesses tailings at the Century mine in Queensland, are also directly leveraged to the London price rather than domestic Chinese conditions, which matters given the regional split in the market.
What to watch next
- Whether LME zinc stockpiles stabilise or keep falling toward the roughly 95,000 tonne lows flagged by traders in early September.
- Aurelia Metals’ FY27 production and cost guidance, expected alongside further updates following the FY26 result.
- Progress at new supply projects such as Ivanhoe’s Kipushi mine in the Democratic Republic of Congo, which could ease concentrate tightness later in 2026.
- Any shift in China’s willingness to release zinc inventory into LME warehouses, which would directly relieve the current London squeeze.
Frequently Asked Questions
Why has zinc rallied so sharply while other base metals have been steadier?
Zinc’s move has been driven less by demand growth and more by a physical supply squeeze in western markets. Falling mine output and smelter disruptions have cut refined supply just as LME warehouse stocks ran down to multi year lows, creating a localised shortage in London even though China holds ample inventory.
Which ASX companies have the most exposure to the zinc price?
Diversified producers with zinc, lead or silver by product credits, such as Aurelia Metals through its Hera and Federation mines, and dedicated zinc producers like New Century Resources at the Century mine, carry the most direct leverage. Investors should check each company’s own disclosures for the specific commodity mix behind its revenue.
This article is general information and market commentary only. It does not take into account your personal objectives, financial situation or needs, and it is not financial product advice. Commodity and mining equities carry a high degree of risk, including price volatility and the potential loss of capital. Consider seeking advice from a licensed financial adviser and read our full Disclaimer before making any investment decision.