The zinc concentrate market is showing clear signs of loosening. Chinese ore availability rose 45% year-on-year over January-July 2025, according to StoneX data. Record-low realized concentrate TCs of ~$80/t in 2024 are forecast to rise toward $160/t in 2026 as ore tightness eases and zinc prices improve smelter profitability.
Chinese refined production hit a 17-month high in August 2025, and the domestic market is forecast to enter a surplus by year-end. The ramp-up of the Kunlun smelter in Q4 2025 is expected to add 560,000 t/yr of capacity — roughly equivalent to the annual level of net imports.
Global mine supply is on track to rebound in 2025 and 2026 after three years of prior declines. ILZSG data shows ex-China zinc concentrate output rose 6.47% year-on-year in Q1 2025 to 1.3 million tonnes. The Huoshaoyun lead-zinc mine in Xinjiang ramped toward a target of 700,000-750,000 t/yr.
StoneX expects LME zinc to trade in a 'tightly higher' range near $3,000/t near-term, then pull back over 2026 as increasing supply and a modest demand outlook allow global stocks to normalize. Morgan Stanley forecasts zinc prices falling slightly to $2,900/t for 2026, citing recovering LME inventories.
The bear case is reinforced by demand weakness. China's real estate sector accounts for approximately 50% of global refined zinc demand, and the property downturn continues. ILZSG data shows flat refined demand in early 2025 — 4.28 million tonnes consumed vs 4.30 million tonnes a year earlier.
The zinc market is near peak tightness. If you can delay spot purchases by 3-6 months, you may benefit from lower prices as smelter output increases and TCs normalize. But the backwardation means paying up for immediate delivery. The optimal strategy: secure near-term needs at fixed premiums, but hold off on long-term contracts until the supply rebound materializes.