Trafigura Pulls Zinc From LME Warehouses, Keeping Market Cool Despite Inventory Drop
Commodity giant shifts metal from Singapore to the U.S., balancing smelter downtime, tariff risks, and warehouse strategies.
August 13 EST: Trafigura is pulling large volumes of zinc out of the London Metal Exchange’s Singapore warehouses, a move that is sending visible inventories to their lowest point in over a year but barely making a dent in prices.
Inventories Slide, But Prices Don’t Blink
LME zinc stocks fell to 78,475 metric tons on August 12, down more than 30% in just over two weeks. Another 33,000 tons is on notice for delivery, much of it tagged to Trafigura. Normally, a drawdown of that scale would light a fire under traders. Instead, zinc is still trading about 4% lower than it was in January.
It’s not that the market has stopped watching inventories it’s that it no longer trusts them. Most LME zinc sits in Singapore, where metal shuffles in and out of warehouses for financial reasons that have little to do with actual consumption. In that sense, the LME’s daily warehouse report is starting to look less like a weather forecast and more like a corporate press release informative, but only if you know how to read between the lines.
Supply Chain Insurance
One part of this move is pure logistics. Nyrstar’s Clarksville smelter in Tennessee owned by Trafigura is going offline in mid-October for a three-week maintenance shutdown. With a capacity of 125,000 tons a year, it’s a major domestic source. Trafigura appears to be back-filling the gap in advance, moving metal across the Pacific to keep U.S. customers supplied without missing a beat.
The Warehouse Trade
Another piece is the rent-deal trade a staple of the metals business that never makes the headlines. In these deals, a trader delivers metal into an LME warehouse, earns a cut of the rent the warehouse collects, then either sells or withdraws the metal when the math no longer works. It’s legal, common, and entirely disconnected from whether a carmaker in Ohio actually needs zinc next week.
The Tariff Clock
There’s also a timer running in Washington. The U.S. is weighing tariffs on certain mineral imports, zinc included, as part of an ongoing trade review. Shipping now could mean avoiding an extra duty later. That’s the kind of preemptive move commodity houses are built for better to pay for freight today than face a 10% penalty tomorrow.
A Surplus On Paper
The International Lead and Zinc Study Group still pegs the global market in surplus about 90,000 tons earlier this year. But as traders like to remind anyone who will listen, surplus metal in the wrong place might as well not exist. It’s one thing to have a warehouse full of zinc in Singapore; it’s another to have it on a truck in Illinois when a galvanizing plant calls.
Reading The Real Signal
What Trafigura is doing isn’t necessarily a bet on zinc prices skyrocketing. It’s supply chain housekeeping, tariff hedging, and a bit of warehouse arbitrage rolled into one. For the broader market, the real lesson is that LME stocks have become a noisy signal more about finance than furnace heat.
If other major traders follow Trafigura’s lead and start moving zinc into the U.S. ahead of policy shifts, the market could see localized tightness later this year. But for now, the numbers on the screen still say “plenty of zinc,” even if the real story is about where it’s parked.
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A Wall Street veteran turned investigative journalist, Marcus brings over two decades of financial insight into boardrooms, IPOs, corporate chess games, and economic undercurrents. Known for asking uncomfortable questions in comfortable suits.
