Zinc TC Benchmark Hits $0/t — Smelters in Survival Mode

The zinc treatment charge benchmark has fallen to zero — a number that would have been unthinkable just a year ago. For some concentrate supply agreements negotiated in the 2026 trial period, smelters are receiving no processing fee whatsoever, effectively agreeing to treat mine concentrate at cost or below in order to keep their furnaces running.

This marks a catastrophic collapse from the 2025 benchmark of $80 per tonne, which was itself considered a historically low settlement when Teck Resources and Korea Zinc agreed to those terms. At the time, the industry hoped that level represented a floor. Instead, it was just a waypoint on the way down.

The root cause is a structural shortage of zinc concentrate. Global mine production has struggled to keep pace with smelter capacity additions, particularly in China where extensive new smelting capacity has come online without corresponding domestic mine supply growth. The result is fierce competition among smelters for a shrinking pool of available concentrate units, which miners have exploited by demanding ever-lower treatment charges.

At $0/t TCs, the economics of custom smelting are deeply impaired. Chinese smelters outside integrated operations are likely to face the most acute pressure, with marginal producers potentially forced to cut runs or shut altogether. European smelters, already battered by high energy costs, face an additional existential threat to their processing margins.

The ultimate consequence may be smelter capacity rationalization that rebalances the concentrate market — but the pain will be severe before the healing begins. For zinc prices, the supply response on the smelting side could tighten refined metal availability even as concentrate markets remain oversupplied, creating a rare bifurcation along the value chain.