Two major supply disruptions are simultaneously tightening the zinc concentrate market. Glencore's Kazzinc smelter in Kazakhstan suffered a fatal blast on May 5 and is now operating at reduced capacity, removing a key source of refined zinc from the LME system. Meanwhile, Chinese smelters are facing disruptions to shipments of raw materials from Iran due to the ongoing Middle East conflict.
The Iran disruptions are particularly acute because Chinese smelters had been counting on increased Iranian concentrate shipments to offset the slower-than-expected ramp-up at Russia's Ozernoye mine. Olga Hepting, CRU's head of zinc markets, noted both countries were set to expand production substantially this year, but now the conflict is throttling supplies from Iran. Chinese smelters are now actively seeking alternative feedstock for May and June.
The cumulative effect of these disruptions is visible in the treatment charge market. Import zinc concentrate TCs have fallen to -$56.25/dmt, while CZSPT Q2 guidance has already been undershot by spot markets. China has ample refined zinc inventory but cannot access enough concentrate to keep smelters running at full capacity, creating a bottleneck that supports LME prices even as downstream demand softens.