The Ratio Slides: SHFE/LME Zinc Prints 6.8 as Macro Sentiment Weakens

By Siam Sukkhee Trading Co., Ltd — 2026-10-23 — Bing News — zinc price LME

The ratio dropped to 6.8 this week. Nothing dramatic, but it's a step back from last week's 6.9, and the direction matters more than the decimal point.

What happened, really, is macroeconomics won the day overseas while China's own supply side tried—unsuccessfully—to hold the line. Two separate stories, same outcome.

The Dollar Won't Budge

US jobless claims fell. On paper, that sounds bullish. But the market read it differently. Inflation expectations stayed elevated, so traders cooled on the idea that the Fed would cut rates anytime soon. The dollar held firm. A firm dollar is bad for anyone sitting on LME zinc—it makes the metal more expensive in other currencies.

The cash-forward spread (LME Cash-3M) stayed around $40 per tonne, which at least threw domestic buyers a bone. Some structure, some backwardation. Not much, but enough to keep spot prices from collapsing.

Domestically: Tight, Not Tight Enough

China's side of the story is different, actually, that's not quite right—it's the same story told in reverse. SHFE zinc fell alongside LME, but the mechanics diverged. Macro sentiment here was weak. End-of-year nerves, maybe, or just the general heaviness of things.

Yet the ore market wouldn't budge. Treatment charges (TCs) stayed low—smelter margins compressed, which means smelters have less appetite for production, which means supply stays constrained. Social inventory continued to drain out of warehouses. It's the kind of support that whispers rather than shouts.

Both exchanges caught the same downdraft. The import window stayed closed, which tells you something about arbitrage—not profitable enough to ship zinc into China.

The Outlook

The ratio is expected to consolidate lower in the near term.

Source: "The LME Cash-3M backwardation structure held at around $40/mt, providing some support to overseas spot." — Shanghai Metals Market (SMM)

Tags: zinc trading Southeast Asia