Zinc prices are being driven higher by a supply squeeze that has flipped the market from expected surplus to deficit, as Chinese smelters cut raw-material consumption after treatment charges collapsed to historic lows.
The London Metal Exchange three-month zinc price was approx $3,475 per tonne on a day-delayed basis as of June 30, 2026, after touching $3,633.50 per tonne in May — a near four-year high and up about 13% for the year at that point.
The immediate pressure point is China, which produces about half of the world’s refined zinc but depends heavily on imported ore. Treatment charges on imported zinc concentrate have fallen below zero, meaning smelters are effectively paying miners to secure material rather than being paid to process it. Bloomberg reported earlier in June that charges had slumped to minus $50 per tonne, while Fastmarkets later assessed China CIF zinc concentrate TCs at a record low range of minus $70 to minus $30 per tonne in late May.
That pressure is now feeding into output discipline. Sixteen major Chinese zinc smelters, representing about 4.7 million tonnes of annual capacity, reportedly agreed at an industry meeting in Xining to cut zinc concentrate consumption by 600,000 to 1 million tonnes this year. The cuts matter because China has been the main buffer in the refined zinc market. If Chinese smelters pull back, a market that was supposed to be oversupplied gets tighter.
The expected surplus has already failed to appear. The International Lead and Zinc Study Group now forecasts a 19,000-tonne refined zinc deficit in 2026, with demand seen at 14.00 million tonnes and output at 13.99 million tonnes.
The squeeze is not only due to pressures from China. Supply disruptions at Glencore’s Kazzinc operations in Kazakhstan and Nexa Resources’ Cajamarquilla smelter in Peru hit around 600,000 tonnes of annual capacity, tightening Western refined zinc availability. In 2025, global mined zinc output rose 4.8%, but refined zinc output increased only 1.7%, with the growth concentrated in China.
Geopolitics has added another layer. Chinese smelters have faced disrupted zinc concentrate shipments from Iran, while Trafigura has halted some Cuban zinc shipments as US pressure on Cuba complicates supply flows.
The result is a split market. China still has domestic refined zinc available, and traders are watching for an export window to clear local oversupply. But outside China, low inventories and smelter outages have kept the market tight.
For investors, the story is simple: zinc demand is weak in the usual places, especially Chinese property. But prices are being set by supply, not demand. Low treatment charges are crushing smelter margins, concentrate availability is tight, and production cuts are turning a forecast surplus into a deficit.
Zinc is no longer trading like a dull construction metal. It is trading like another warning signal from the base-metals supply chain.