The global zinc market is split in two: China holds a surplus of roughly 290,000 tonnes while the rest of the world faces a deficit of about 90,000 tonnes. Chinese exports hit a 20-year high of 42,800 tonnes in November 2025 during the LME squeeze, but slim margins, shipping bottlenecks, and a closed arbitrage window are keeping the metal trapped in China.
China's refined zinc surplus is estimated at approximately 290,000 tonnes, while the ex-China market is running a deficit of about 90,000 tonnes, according to SMM estimates published during the May Day 2026 review period. This structural imbalance is arguably the single most important feature of the global zinc market in 2026 — a market that on paper appears adequately supplied but in reality sees Western consumers struggling to secure metal. (FACT: SMM May Day 2026 Review, metal.com)
On a consolidated global basis, the numbers would suggest a modest surplus. But as Reuters columnist Andy Home noted in January 2026, "all the surplus is stuck in China," leaving the Western market short and reliant on higher LME prices to attract Chinese exports. (FACT: Reuters, Andy Home, January 27, 2026) Fastmarkets echoed this in March 2026, stating that "China has a significant surplus in zinc production, while the rest of the world faces a shortfall presently." (FACT: Fastmarkets, March 2026)
The LME squeeze in October 2025 proved the mechanism works in extremis. When LME on-warrant stocks collapsed to just 24,850 tonnes and the cash premium spiked to over $300 per tonne, Chinese smelters responded by shipping 42,800 tonnes of refined zinc to LME warehouses in Hong Kong, Singapore, and Taiwan — the highest monthly export tally in nearly 20 years. (FACT: Reuters, Andy Home, January 27, 2026)
But in normal conditions, the arbitrage does not function smoothly. Fastmarkets and SMM both highlight that slim profit margins on exports, shipping bottlenecks, and domestic stockholding patterns limit how quickly Chinese metal can rebalance Western tightness. The LME-SHFE arbitrage window — which needs to be open wide enough to cover logistics and margin costs — remains tightly calibrated. Chinese exports have been minimal at only 10,600 tonnes over Q1 2026 once the squeeze subsided. (FACT: Reuters, Fastmarkets, SMM, 2026)
The disconnect is rooted in divergent production trajectories. China's refined zinc output surged 6.7% in 2025 and is expected to grow a further 3% in 2026, driven by new smelter capacity additions including Jiyuan Wanyang and Xinjiang Huoshaoyun. Meanwhile, Western refined production contracted in 2025 as a cascade of smelter closures and curtailments — Toho Zinc's Annaka, Nyrstar's Hobart, Korea Zinc's Seokpo, Glencore's Italian operations — removed capacity from the global pool. The result is a market where Chinese surplus coexists with Western shortage, and the two rarely meet. (FACT: ILZSG via Reuters, May 20, 2026)
Do not rely on aggregate global balance forecasts to plan your zinc procurement. The relevant question is not whether the world has enough zinc — it is whether the region where you buy has enough zinc. If you are a European or North American buyer, the Chinese surplus is largely irrelevant to your supply picture at current LME prices. The arbitrage window needs to open by at least $100-150/t in the LME cash premium for Chinese metal to flow westward in meaningful volumes. Watch the LME cash-3M spread daily; a return to backwardation above $50/t signals Chinese exports may resume. Until then, plan for a tight Western market.
Rzzro — Procurement, quantified. • Reduce risk. Increase leverage.