The zinc concentrate market is showing the first signs of loosening after three years of intense tightness. Treatment charges have risen 15-20% from Q1 2026 levels, reflecting improved concentrate availability as new mines ramp up. Ozernoye in Russia reached 75% of its 320,000-tonne design capacity in May, while Gamsberg Phase 2 in South Africa added 70,000 tonnes of annual concentrate output.
The TC improvement carries significant implications for smelter profitability. Chinese smelters are now generating positive TC margins for the first time since Q3 2025, though the $145-165/t range remains below the $200-250/t level that most analysts consider the smelter breakeven threshold including by-product credits. The improvement has slowed the pace of smelter curtailments in China.
However, the TC recovery is unevenly distributed. Independent Chinese smelters without captive mine supply are receiving the lower end of the TC range ($145-150/t), while integrated producers with mine-of-origin concentrate are securing $160-165/t. This differential is driving consolidation pressure on smaller smelters that lack raw material security.
Looking ahead, the TC recovery trajectory depends on the pace of new mine ramp-ups. Boliden is progressing toward full capacity at its Tara mine restart in Ireland, which will add 130,000 tonnes of annual zinc concentrate by Q4 2026. The combination of Tara, Ozernoye, and Gamsberg represents approximately 520,000 tonnes of new annual concentrate supply — equivalent to 3.8% of global mined zinc output.
The TC recovery is a leading indicator that concentrate supply is improving, which will eventually translate into higher refined zinc output. Buyers should expect LME zinc to drift toward $3,200-3,400/mt in Q4 2026 as the surplus narrative takes hold. Defer a portion of Q4 procurement to take advantage of expected lower prices.