LME zinc futures were last recorded at $3,515 per tonne on May 27, according to MacroMicro, with the metal trading in a $3,400-3,500 range through late June. The price reflects a market that has held gains from the October 2025 supply squeeze that briefly pushed LME three-month zinc to three-year highs. TradingEconomics data from February showed zinc at $3,406.65/t, up 18.7% year-over-year, supported by LME inventories that have collapsed from 230,500 tonnes at the start of 2024 to roughly 120,000 tonnes today — and at one point in late 2025 fell to just 33,825 tonnes, according to InvestingNews.
The zinc market is being torn between two conflicting forces. On one side, global mine supply is surging: the International Lead and Zinc Study Group (ILZSG) reports that global zinc mine output jumped 6.5% year-on-year in the first ten months of 2025, driven by new and restarted projects including Kipushi in the DRC, Aripuanã in Brazil, Tara in Ireland, and Ozernoye in Russia. Concentrate availability has improved dramatically, and ILZSG forecasts a 271,000-tonne refined zinc surplus in 2026 as smelters in China ramp up. China's refined zinc output was up 8.4% year-on-year in the first ten months of 2025.
On the other side, the surplus has not materialized in the refined market because smelters are under extreme margin pressure. The 2026 benchmark treatment charge between Teck Resources and Korea Zinc was set at just $85 per dry metric tonne, a marginal increase from the record-low $80/t in 2025. Spot TCs for zinc concentrates delivered to China have collapsed to $0-30 per tonne as of March 2026, with some premium cargoes trading at negative TCs — meaning smelters effectively pay miners to process their ore. Fastmarkets reported on June 9 that Chinese zinc smelters are openly warning of production cuts, echoing the coordinated operating-rate reductions of late 2024 that successfully pushed TCs higher.
The structural feature shaping the zinc market is an east-west disconnect. China, which accounts for roughly half of global refined zinc production, is heading toward becoming a net exporter in 2026. Analysts at CRU and Macquarie project net exports of approximately 30,000 tonnes, compared with net imports of 209,767 tonnes in 2025. Chinese refined zinc supply is forecast to grow 4.2% in 2026 against demand growth of only 1%, as new smelting capacity comes online while the property sector — the largest consumer of galvanized steel — remains in a prolonged slump. ILZSG expects Chinese zinc demand to be flat in 2026.
Analyst price forecasts reflect this tension. Fastmarkets expects upward momentum to continue through H1 2026, supported by low exchange inventories and regional supply disparities, but sees a "reality check" in H2 2026 or early 2027 as global surpluses become more visible. Morgan Stanley calls for a 2026 average of $2,900/t, well below current spot levels. StoneX, noting that zinc was the weakest base metal for much of 2025 before a Q3 outperformance, expects prices to pull back from current levels as mine supply growth flows through to refined output — but only if smelters have the margin to process that ore, which current TCs do not support.
The key variable that most forecast models may be underestimating is smelter discipline. If Chinese smelters follow through on production cuts, the 271,000-tonne ILZSG surplus forecast could be reduced substantially or eliminated entirely. Smelters' byproduct revenues from sulfuric acid, silver, copper, and gold — which Fastmarkets notes have become critical to profitability — have provided a buffer, but silver prices are volatile and acid prices are under pressure. The China Zinc Smelter Purchase Team set Q2 2026 TC guidance at $35-70/t, down sharply from $120-140/t in Q4 2025, signaling that the purchasing environment has deteriorated rapidly.
For buyers, the message is nuanced. Current LME zinc near $3,500/t is elevated relative to the marginal cost of production and most analyst forecasts. If smelter cuts fail to materialize and Chinese exports flood the market, prices could correct sharply toward the $2,900-3,000 range. But if smelter discipline holds and LME inventories remain at critically low levels, zinc could stay above $3,200/t through year-end. The prudent strategy: avoid locking in fixed-price annual contracts at current levels. Instead, negotiate quarterly or semi-annual contracts with reference to LME settlement plus a fixed premium. Buyers with exposure to Chinese-origin galvanized steel should prepare for lower prices as Chinese zinc surplus translates into cheaper finished steel exports. Monitor the CZSPT's Q3 guidance meeting in late June for the clearest signal on smelter behavior.
For buyers, the message is nuanced. Current LME zinc near $3,500/t is elevated relative to the marginal cost of production and most analyst forecasts. If smelter cuts fail to materialize and Chinese exports flood the market, prices could correct sharply toward the $2,900-3,000 range. But if smelter discipline holds and LME inventories remain at critically low levels, zinc could stay above $3,200/t through year-end. The prudent strategy: avoid locking in fixed-price annual contracts at current levels. Instead, negotiate quarterly or semi-annual contracts with reference to LME settlement plus a fixed premium. Buyers with exposure to Chinese-origin galvanized steel should prepare for lower prices as Chinese zinc surplus translates into cheaper finished steel exports.