Spot zinc treatment charges have fallen below $50 per dry metric tonne in June 2026, according to Fastmarkets assessments. This is the lowest level since 2018 and well below the 2026 benchmark TC of $80/dmt set in March. Smelters are paying miners for access to concentrate rather than being paid to process it -- an inversion that signals acute raw material scarcity.
The International Lead and Zinc Study Group (ILZSG) estimated the global zinc concentrate market was in deficit by roughly 200,000 tonnes in the first quarter of 2026. Mine production has been constrained by grade declines at aging operations in Australia and Peru, while new mine capacity in Africa and Latin America has been slower to ramp up than expected.
At TCs below $50/dmt, most smelters cannot cover their operating costs. The breakeven TC for a typical zinc smelter is estimated at $120-150/dmt depending on energy costs and by-product credits. Chinese smelters, which account for roughly 45% of global refined zinc production, are particularly exposed -- many lack long-term supply contracts and rely on the spot concentrate market.
So far, the low TCs have not translated into meaningful smelter curtailments. But the ILZSG warned in its June update that 'if concentrate tightness persists through H2, smelter production cuts are inevitable.' Any curtailments would tighten the refined zinc market and support LME prices, potentially reversing the current macro-driven selloff.
The concentrate tightness is a ticking clock for refined zinc supply. Smelters can’t operate indefinitely at negative margins. If curtailments materialize in H2 — which seems likely given current TC levels — refined zinc could tighten quickly. Securing Q4 zinc coverage now, while macro sentiment is suppressing prices, is a prudent hedge against a supply-driven price spike later in the year.