Two-speed zinc market means China may get a chance to export
Credit: Zarin Industrial and Mining Group
Chinese zinc producers and traders are watching for opportunities to ship metal overseas, after global prices hit the highest since the start of the year even as the domestic market struggles.
The recent rally in zinc on the London Metal Exchange has stretched the ratio with prices on the Shanghai Futures Exchange to the most in more than two years. While the gap isn’t quite enough to encourage overseas sales, it’s not far off. Major suppliers are preparing for that to happen, analysts and traders said, perhaps by sending material to the LME’s newly opened warehouses in Hong Kong.
The two-speed zinc market that’s emerged has China on the one hand with growing output, record ore imports and relatively weak demand, set against a global market where stockpiles are thinning and smelters have cut output. August production in China was at a 17-month high, while inventories on the LME are at their lowest in more than two years.
“The spread between domestic and overseas markets has been more pronounced for zinc than other metals,” Zijin Tianfeng Futures Co. said in a note. “The likelihood of reversion is high, either by the opening of the export window or through better margins for refineries outside China.”
The last time China shipped out meaningful volumes of zinc was in 2022, in the aftermath of Russia’s invasion of Ukraine, when rocketing energy prices triggered widespread smelter closures and surging LME prices. In May 2022, exports spiked to more than 35,000 tons. This year, they’ve averaged 1,200 tons a month through July.
Zinc is a metal chiefly used to galvanize steel, so its fortunes in China are heavily tied to what happens in that market. Chinese steel demand is dropping, a casualty of the country’s protracted property crisis, while broader economic activity has slowed sharply in recent months.
The global market is much tighter, with LME zinc’s cash-to-three month backwardation on Tuesday hitting its highest since October last year at more than a ton, while the benchmark price topped ,000 a ton for the first time since the initial trading day of 2025./mining.com
Saturday ۲۰th of September ۲۰۲۵ 62
More news on the subject
