Global Zinc Market Tightens as Chinese Smelters Adjust Production

Global zinc mine production continues to decline, with supply pressures mounting, particularly in China. Fourteen Chinese smelters, responsible for about 70% of the country’s refined zinc output, recently agreed to adjust maintenance schedules and delay new capacity to protect margins. This move sparked a 10% rally in Shanghai Futures Exchange zinc prices, but the global market remains in surplus.

Despite the supply squeeze, especially in China where treatment charges for imported concentrates have dropped to multi-year lows, the global refined zinc market is still oversupplied. Chinese zinc production fell by 2.8% year-on-year, while global output dropped by just 0.1%, offset by European smelter restarts. The ongoing surplus saw LME zinc stocks increase, with prices up 9% since the start of the year. However, weak demand, particularly from the construction sector in China and Europe, continues to weigh on the market, raising questions about the sustainability of the recent price rally.