Core Viewpoint - The London Metal Exchange (LME) zinc market is experiencing one of the most severe squeezes in decades, with traders scrambling for dwindling inventories, pushing spot zinc prices to their highest premium levels in over 20 years [1][3]. Group 1: Market Dynamics - The premium of spot zinc over three-month contracts has surged to $323 per ton, marking the highest level since at least 1997, indicating a typical sign of spot demand exceeding immediate supply [1][3]. - Traders are rapidly purchasing remaining inventories, with six independent entities holding large long positions that correspond to at least three times the immediately available inventory in the LME storage system [3][4]. - The significant long positions put pressure on short sellers, who may face substantial losses if unable to deliver physical metal [4]. Group 2: Inventory Situation - LME zinc inventories have plummeted to near historical lows due to production cuts by Western smelters following a collapse in processing profits, with only 24,425 tons available for buyers, insufficient to meet even one day's demand in a global market consuming 14 million tons annually [4]. - The current low inventory levels create a fragile balance in the market, making it susceptible to shocks, as noted by industry experts [4]. Group 3: Price Discrepancies and Export Opportunities - The disparity in zinc prices between the LME and the Shanghai Futures Exchange (SHFE) has prompted some Chinese smelters to plan exports, which may provide short-term relief for buyers in the LME market, although it may not fundamentally resolve the inventory shortage [5].