The zinc market is caught between conflicting signals: official ILZSG forecasts project growing surpluses, but exchange inventories are at critical lows that typically indicate acute shortage. The ILZSG forecasts global refined zinc production will exceed demand by 85,000 tonnes in 2025 and by 271,000 tonnes in 2026, driven by mine supply recovery in Brazil, Canada, Norway, and China. Global mine production rose 6.5% year-on-year to 10.51 million tonnes in the first ten months of 2025, and is expected to reach 13.8 million tonnes of refined output for the full year.
However, the disconnect between the ILZSG surplus narrative and market reality lies in regional imbalances and smelter economics. European zinc smelters are operating at reduced capacity due to energy costs, while Chinese smelter expansion is concentrated in the domestic market, not available for export. The Kunlun smelter expansion adds 560,000 tonnes per year of capacity to the Chinese market, but this material is unlikely to reach LME warehouses given China's domestic demand absorption and the country's pivot toward self-sufficiency.
The new Tala Hamza mine in Algeria is scheduled to start production in 2026, while a new zinc circuit at Asmara in Eritrea is planned for late 2026-2027. These additions support further appreciation in spot TCs in 2026, potentially reaching $160/t from the current $80/t. However, new mine supply takes 12-18 months to translate into refined metal available for LME delivery, meaning the inventory crisis is unlikely to resolve before 2027.
The surplus forecasts are misleading for procurement planning. Regional imbalances mean that LME-available material remains scarce despite headline surplus numbers. Secure zinc volumes now through term contracts rather than relying on spot availability, which carries significant premium risk.