Zinc prices have declined in China recently amid weak demand dynamics

Recently, zinc prices have exhibited a consolidating and declining trend, shifting lower after a period of stability as market focus returned to fundamental weaknesses. The metal underperformed during its typical peak consumption season, with growing inventory levels placing persistent downward pressure on the market. Overall, the zinc market is characterized by ample supply and sluggish demand.

On the raw materials front, losses on imported zinc concentrate have widened, keeping the import window largely closed. While some previously booked concentrate is expected to arrive, a significant decline in imports is anticipated. With the price ratio between domestic and international markets remaining unfavorable, smelters are showing a clear preference for domestically sourced ore. In response, traders have raised import treatment charges to encourage sales. Looking ahead, domestic treatment charges may see a slight decrease, while import charges could still have room to rise.

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From a supply perspective, although lower zinc prices have compressed smelters' margins, significant by-product revenue has kept profitability at reasonable levels, sustaining their enthusiasm for production. While output dipped slightly due to maintenance at some smelters, a moderate rebound is expected as these plants resume operations.

Demand, however, has remained subdued. The consumer market has shown no clear signs of recovery, with key indicators continuing to fall short of expectations even during the traditional high season. Given current economic conditions and consumption patterns, a significant demand recovery appears unlikely in the near term, with the market expected to remain stable but soft.

Looking forward, domestic zinc concentrate output may decline as some mines reduce or halt production. This could lead to slightly lower treatment charges for domestic ore, while charges for imported material may still edge higher. Although smelter restarts are likely to boost refined zinc supply, a substantial recovery in end-user demand is not anticipated, suggesting continued market softness in the period ahead.