Commodity trading house Trafigura is one of the entities holding a large share of available zinc on the London Metal Exchange, two industry sources said, as prices of the metal used to galvanise steel hit their highest in almost four years.

Available, or on-warrant, LME zinc stocks stand at just 73 850 metric tons – equivalent to around two days of global consumption. The world used 13.8 million tons of refined zinc last year, according to the International Lead and Zinc Study Group.

LME data shows three large holdings of LME zinc warrants – title documents conferring ownership – and cash contracts 0#LME-WHC. That gives the three entities significant influence over immediately deliverable supply and has fuelled worries about availability on the LME.

Trafigura declined to comment. The identities of the other two holders are not known.

Benchmark three-month zinc on the LME rose as much as 1.7% to $3 703.50 per ton on Monday, its highest since August 16, 2022, before giving up gains to trade down 0.3% to $3 633 as of 1500 GMT.

Fears of a shortfall have created a premium, or backwardation, for nearby zinc contracts over forward contracts with longer maturities.

The cash LME zinc contract is trading roughly $60 a ton higher than the three-month forward, easing from more than a $73 premium a week ago but still in steep backwardation, indicating near-term tightness.

Meanwhile, the premium for the August contract over the three-month forward is above $63 a ton, the highest since the spread started trading on May 20.

One market participant held a short position equivalent to 20% to 29% of open interest on the LME August zinc contract, exchange data show, which could be a bet on lower prices or a producer hedging its output.

However, positions must be squared or rolled over before the contract expires on August 19. With supply tight, the company may struggle to source the zinc needed for delivery – unless it is a producer – while the backwardation will make rolling the position expensive.