SHFE zinc rose ¥90 to ¥24,275/mt on June 22, a 0.37% gain that tracked LME zinc's broader rally. The SHFE-LME spread remains narrow at current exchange rates — roughly ¥23,850 equivalent versus the LME price of $3,613/mt (¥26,135/mt at 7.24 CNY/USD) — meaning there is no clear arbitrage incentive in either direction. SHFE zinc is effectively at import parity.
Chinese galvanized steel mills are running at 92% of nameplate capacity, according to SMM data, driven by continued strength in infrastructure steel demand. China's National Development and Reform Commission approved ¥2.1 trillion in infrastructure projects in Q1 2026, and construction activity typically peaks in Q2–Q3. Galvanized steel — which accounts for roughly 50% of zinc demand — is a direct beneficiary.
Treatment and refining charges (TCRCs) for spot zinc concentrate have stabilized at $70–80 per ton, down from $120–140/t in early 2025. Lower TCRCs mean smelters are competing harder for concentrate, confirming the concentrate market tightness that ultimately feeds into refined metal tightness. Chinese smelters are running at 78% utilization — constrained not by demand but by concentrate availability.
Chinese zinc demand from galvanizers is real and infrastructure-driven, not speculative. That means the demand floor is solid. For buyers with exposure to Chinese supply chains, the risk is that tight concentrate markets eventually force Chinese smelter cuts, tightening refined zinc availability. Monitor monthly TCRCs — if they drop below $50/t, it signals concentrate is getting very tight and smelter cuts are likely within 4–6 weeks. Get ahead of that by securing Q3 volume commitments now rather than waiting for spot-market tightness.