Zinc is the second-best performing base metal since the onset of the Middle East conflict.
Since April, zinc prices both internationally and in China have continued their strong upward trend, extending gains from earlier in the year. LME zinc prices rose from approximately USD 3,200/tonne at the beginning of April to nearly USD 3,500/tonne, while domestic Chinese zinc prices increased from RMB 23,700/tonne to a high of RMB 24,600/tonne. In April, the average LME zinc price was USD 3,362/tonne, up 5% month-on-month and 28% year-on-year. The average domestic zinc price was RMB 23,800/tonne, up 0.4% month-on-month and 4% year-on-year. Over the first four months of the year, average international and domestic zinc prices stood at USD 3,270/tonne and RMB 24,200/tonne, respectively.
Entering May, the zinc market accelerated its rally, with LME zinc prices successfully breaking through the USD 3,600/tonne barrier—the highest level in three and a half years and entering a historically high-price range. As of May 22, international and domestic zinc prices were trading around USD 3,550/tonne and RMB 24,800/tonne, respectively.
Using the onset of the Middle East conflict on February 27 as a starting point for measuring price changes, and as of May 22, the performance of various commodities was as follows: Aluminium +16% > Zinc +7% = Nickel +7% > Copper +3% > Lead +3% > Tin -6%. Silver was down 4%, and Gold down 10%. This indicates that zinc has been the second-best performing base metal since the conflict began, while also outperforming star assets like gold and silver. This performance stands in significant contrast to the consensus at the end of 2025, which suggested that zinc prices would lag considerably behind.
Zinc Mine Supply Disruptions More Frequent Than Last Year
Global zinc mine supply was relatively stable throughout 2025, a rarity in the past decade, leading many to view it as a major supply year. Smelter profitability improved, and some private funds, anticipating significant supply growth, were inclined towards short positions. However, entering the first quarter of 2026, overseas supply contracted by 3% year-on-year, a marked deviation from initial expectations. During this period, supply disruptions were frequent: floods in Australia in January, export disruptions due to the Middle East conflict in February, an earthquake at a Swedish mine in March, downward revisions to production guidance by a major overseas company in April, and an energy crisis in Peru alongside a sharp rise in diesel prices in Australia in May. Many of these disruptions involved large-scale, world-class projects. Some have already impacted actual production, while others remain at the level of market sentiment and expectations.
From a corporate perspective, first-quarter production among listed overseas zinc miners was mixed. Ivanhoe, Nexa Resources, Peñoles, Newmont, and HZL achieved year-on-year growth, while Vedanta and Southern Copper saw largely flat production. In contrast, Zijin Mining, Teck Resources, Volcan, Boliden, and Glencore all experienced declines of varying degrees.
Expectations for domestic Chinese zinc mine output have also been revised downward. This is primarily due to slower-than-expected ramp-up at a large domestic project, the postponement of another project originally slated for the second half of the year, and limited contribution from another project starting in July. Among existing mines, despite zinc prices approaching RMB 25,000/tonne and mine-level profits of approximately RMB 6,000/tonne, supply elasticity remains weak due to falling ore grades and environmental constraints. In the first four months, domestic zinc concentrate production reached 1.24 million tonnes in metal content, an increase of only 1.5% year-on-year.
Concurrently, zinc concentrate treatment charges (TCs) have plummeted, reflecting raw material tightness far exceeding early-year expectations. Imported ore TCs have fallen from a high of USD 120/tonne in August 2025 to below -USD 50/tonne recently—a cumulative drop of USD 170. Domestic benchmark TCs have fallen from around RMB 4,000/tonne at their peak last year to below RMB 600/tonne currently, with some quotes even lower. Even including the 80/20 price participation clause, the effective TC has dropped from RMB 5,500/tonne to below RMB 2,500/tonne, pushing smelters back into loss territory when ignoring by-product credits. Overall, in just over a year, TCs have completed a “rollercoaster” cycle, returning to the low levels last seen in November 2024.
Impact of Mine Disruptions Differs for Domestic and Overseas Smelting
Despite frequent mine disruptions since the start of 2026, China’s zinc smelting feedstock supply and production have not been materially impacted.
First, China’s zinc concentrate imports have continued to grow substantially without significant decline. According to customs data, domestic zinc concentrate imports reached 450,000 tonnes (physical weight) in April, still a relatively high volume. In the first four months, total zinc concentrate imports reached 2 million tonnes (physical weight), an increase of 290,000 tonnes year-on-year. Increases came primarily from Peru (+70,000t), South Africa (+60,000t), DRC (+60,000t), Russia (+40,000t), and Bolivia (+40,000t). Decreases were mainly from Kazakhstan (-30,000t), Eritrea (-20,000t), Australia (-10,000t), Mongolia (-10,000t), and Turkey (-10,000t).
Second, Chinese zinc smelting output has maintained robust growth, with no production cuts observed. Domestic refined zinc production in April increased by 6% year-on-year. Although smelters in Xinjiang, Gansu, Yunnan, and Shaanxi began routine maintenance, resumption of production after maintenance in Inner Mongolia, Hunan, and Yunnan, along with increased operating rates in some regions due to better smelting margins, led to a slight month-on-month increase in refined zinc output. Over the first four months, domestic zinc smelting output reached 2.2 million tonnes, a year-on-year growth rate of 6%, second only to copper among base metals.
In contrast, overseas smelting has faced some impact, though the extent remains limited. Recent events include the Ust-Kamenogorsk Metallurgical Complex in Kazakhstan operated by Kazzinc running at reduced capacity due to an explosion, and a temporary shutdown at Nexa Resources’ Cajamarquilla plant due to a fire. Additionally, some European smelters continue to face energy cost volatility and maintenance-related disruptions. However, these events appear localized and short-term, not yet causing a systematic decline in overseas smelting operating rates.
From a corporate standpoint, production trends among major overseas zinc smelters are also mixed. Output has declined for companies like Nyrstar, Glencore, Japanese smelters, SMC, and Boliden. Conversely, Southern Copper, Korea Zinc, Peñoles, HZL, Nexa Resources, Teck, and YP have achieved production growth.
Post time: Jun-08-2026
