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HSBC Warns Global Zinc Market Is Flashing Signs Of Tightness

HSBC's Global Commodity Team warned Thursday that the zinc market is flashing warning signs of extreme tightness:

Global zinc mine supply remains tight: HSBC's Global Commodity Team expects global mine supply to fall 2.1% y-o-y to 12.5mt in 2026, driven mainly by lower production in Latin America.

The zinc market is expected to be slightly tight in 2026e, driven by a modest recovery in demand in Europe and North America amid supply disruptions at smelters and mines.

Overall, concentrate supply remains tight, and there have been smelter disruptions as well. Zinc demand has held up.

Here's where the physical tightness is emerging: Zinc for immediate delivery on the London Metal Exchange traded at a premium of as much as $132.37 a ton over three-month futures Thursday, the widest backwardation this year.

The spread signals intensifying competition for readily available metal in warehouses. Benchmark zinc rose 1.1% to $3,802 a ton earlier today, putting it on course for a fifth weekly gain and its highest close in four years.

Analysts from Chinese brokerage Jinrui Futures Co. wrote in a note, "There are still concerns about overseas supply disruptions in zinc," adding, "So the driving forces for the relative strength of the LME price continue to exist, together with heightened volatility around macroeconomic sentiment."

Beyond zinc, veteran commodities strategist Jeff Currie wrote in a series of X posts Thursday that the convergence of tight physical markets, currency debasement and policy intervention represents the hallmark of a structural commodity bull cycle.

Quantix Commodity Index

Currie told his followers to "Get long and buckle up: the next leg of the ride will see more vol with higher highs across more markets."

Read the report here.

Tyler Durden Fri, 08/21/2026 - 08:00

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Samsung Unleashes $80 Billion Shareholder Return After SK Hynix's "Buyback Bazooka" To Revive Memory Trade

Days after SK Hynix unveiled a staggering 40 trillion won, or $28.6 billion, "buyback bazooka" aimed at putting a floor under its shares following a sharp six-week selloff, Samsung Electronics joined the capital-return push.

The world's largest memory-chip maker said Friday that it plans to return as much as 110 trillion won, or $80 billion, to investors this year. The twin announcements suggest the world's top memory companies are trying to support higher valuations and reward shareholders after memory stocks surrendered some of their blistering first-half gains.

Bloomberg reports that Samsung intends to distribute roughly half of its free cash flow, including 30 trillion won in third-quarter dividends and about 15 trillion won in share repurchases for employee compensation.

Macquarie analyst Daniel Kim summarized Samsung's capital-return announcement:

What's new

• Samsung Electronics (SEC) updated its much-anticipated shareholder return program today after the market close. There was no change in the committed return of 50% of cumulative FCF from 2024-26.
• Its BoD is meeting in October to confirm the earlier distribution of promised FCF. So, the 3Q26 quarterly cash dividend payment should amount to Won30tr, including the regular quarterly cash dividend of Won2.45tr.
• In late January 2027, the company should determine the remaining capital return amount, which SEC estimates at Won60-80tr, and the method of distribution.
• SEC remains on our Marquee buy list.

Why it matters

• Still formulating capital return policy. Excluding the cash dividend of Won20.9tr already paid out and the executed share buyback/cancellation of Won8.4tr, the company estimates the remaining capital to be returned to shareholders at Won90-110tr, which includes the 3Q26 Won30tr payout. This is 20-35% lower than our forecast.
• Announced only the common-share repurchase of Won15tr for employee bonuses. Separately, SEC plans to repurchase 53.3mn common shares, or 0.9% of outstanding shares, which would cost Won15tr based on today's closing price, from 24 Aug. to 21 Nov. The repurchased shares won't be cancelled and will be paid to employees as bonuses, so they won't count as part of the shareholder return. Samsung preferred shareholders might be disappointed.
• Ample free cash flow to support a more progressive capital return policy. Our projection shows that its net cash position should amount to Won718tr, or 40% of its market capitalization, by year-end 2027 and Won1,358tr by year-end 2028. We expect it to generate total FCF of Won1,434tr for 2026-28E, so its balance sheet should have ample cash unless the company returns far more cash to shareholders.
• More cash dividends than share buybacks. While SK Hynix's capital return is more skewed toward share buybacks/cancellations, we expect Samsung's capital return to consist more of cash dividends than share buybacks. This is partly because Samsung Life (032830KS, not rated) and Samsung F&M (000810KS, not rated) are forced to trim their stakes in SEC under local regulations in the event of significant share retirements by SEC.

What now

• Memory market outlook remains bright. Samsung's significant cash position could hurt its ROE; accordingly, we see significant upside in its capital returns over the next two years. We believe that its capital return policy should improve steadily over time. The stock is trading at 2x ex-cash 2027E EPS. Outperform.

Shares fell as much as 2.6% in post-market trading after the announcement due to a lack of clarity on how much stock Samsung would repurchase and cancel. Some analysts had anticipated total returns of around 150 trillion won.

Kim Minji, a portfolio manager at Must Asset Management, explained that "some investors have recently expected up to 150 trillion won of shareholder returns, which explains the post-market share action."

Kang DaeKwun, chief executive officer at Life Asset Management, held views similar to those of Must Asset Management's Kim, saying the announcement underwhelmed expectations:

• After a local media report that the size of the shareholder return would be up to 150 trillion won, the announcement of up to 110 trillion won is triggering a selloff.
• The announcement met market expectations because Samsung kept its promise to return 50% of free cash flow to shareholders.
• While the market's attention is on the size of the shareholder return, what is more important is the supply of shares.
• While US Big Tech companies are issuing new shares, South Korea is seeing a lower supply of shares thanks to large-scale shareholder return programs.

Announcements from SK Hynix and Samsung this week show that the management teams of the world's top memory-chip companies are concerned that momentum in the space has completely evaporated.

"The smart money is moving on," said Alec Young, chief investment strategist at MoneyFlows, a quant-research firm. "The fact that they have given up a lot of their recent bounce in just a couple days shows that there are a lot of weak hands."

SanDisk and Western Digital have fallen more than 30% from their peaks, while Micron and Seagate are down roughly 20%, signaling that momentum investors are rotating into other trades, such as the materials and energy stocks we pointed out earlier in the week (read here).

Tyler Durden Fri, 08/21/2026 - 07:15

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Pennies Have Been Abandoned, Now What Will Be Done With Nickels?

Authored by Adam Dick via RPI

The United States government minted its final penny in November of 2025. This came after fiat money inflation succeeded in depriving pennies of nearly all their value. Pennies are still circulating, but it is increasingly common for stores to round cost totals to avoid giving pennies in change.

Also, people seeing that the metal content of their pennies is worth more than the face value are deciding that it is better to store pennies in a jar than to spend them.

file image via APMEX

The same issues that caused the US government to give up on pennies may soon encourage it to make a major change in regard to nickels.

In an August of 2025 article, I noted that each nickel valued at five cents was costing almost 14 cents to produce. What would the government do in regard to nickels? I suggested two likely options:

The writing seems to be on the wall for nickels. As their metallic value and production costs further and further exceed their face value, there will be more pressure to make changes in nickels’ composition to significantly reduce their cost of production.

Alternatively, the government may, as is being done with the penny, just stop making new nickels.

With penny production ended, it looks like nickel production may soon have a shakeup as well, though one that could buy nickels some time.

Two different versions of the Common Cents Act passed this summer, one in the United States House of Representatives (HR 3074) and the other in the Senate (S 1525).

Both legislative bodies will need to agree on the same bill before it can be sent on to the president for consideration.

Something the two bills have in common is permitting changing the composition of nickels from 75 percent copper and 25 percent nickel to portions to be determined of zinc inside and nickel outside.

The bills specify the composition change must reduce the cost of production of the coins and, "to the greatest extent practicable" have "a minimal adverse impact on machines designed to accept coins."

Such a change for nickels would mirror what happened in the early 1980s with pennies, when newly minted pennies started being 97.5 percent zinc instead of the prior 95 percent copper. The resulting cost savings helped keep penny production going for over forty more years.

Will the US government keep minting nickels for another 40-plus years, or will inflation be so strong that the government much sooner sends the nickel off to the same fate the penny met last year?

Tyler Durden Fri, 08/21/2026 - 06:30

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