The zinc concentrate market is experiencing its tightest conditions since 2021. The temporary suspension of the Myra Falls mine in British Columbia, reduced output at New Century Resources in Australia, and lower grades at several Peruvian operations have removed an estimated 150,000 metric tons of concentrate supply year-to-date.
The International Lead and Zinc Study Group (ILZSG) projects a refined zinc deficit of approximately 80,000t for 2026, following a 65,000t surplus in 2025. The swing to deficit reflects the concentrate constraints feeding through to refined production. Chinese refined output rose only 1.2% year-on-year in May, below expectations.
Galvanized steel demand, which accounts for roughly 50% of global zinc consumption, is showing regional divergence. Asian construction activity remains robust, with Chinese galvanized sheet output up 4% year-on-year in May. European demand has softened, with construction PMIs in Germany and France remaining in contraction territory.
The galvanizing premium has risen 5% quarter-on-quarter to $450-500/t, reflecting tighter zinc availability for downstream processors. Galvanizers in Europe are reporting longer lead times from smelters, and some are operating at reduced capacity utilization rates. The US galvanized steel market remains tight due to Section 232 tariffs limiting import competition.
The zinc deficit narrative is intact. Buyers should assume prices will remain supported above $3,400 through year-end. Consider hedging 60-70% of H2 2026 requirements at current levels. The galvanizing premium increase is a signal that physical availability is tightening; spot purchases may carry increasing premiums.