1. Zinc supply: The loose situation persists, but attention should be paid to structural risks.
Global mining capacity has been released, resulting in a significant increase in supply.
According to data from authoritative institutions, the global zinc concentrate production is expected to increase by 6% to 8% in 2025. The increase mainly comes from:
Overseas resumption of production and new production start-ups:
The Antamina mine in Peru has adjusted its mining sequence, and its zinc production is expected to increase by 200,000 tons in 2025.
The OZ mine in Russia has reached full production, contributing 200,000 tons; the Kipushi mine in Congo has ramped up production, adding another 80,000 tons.
The Endeavor mine in Australia has contributed 80,000 tons to production, while the Tara mine in Ireland has increased its output by 100,000 tons upon resuming production.
Domestic growth:
The Xinjiang Fireworks Cloud Mining Company contributed 80,000 tons to the production increase, while other projects contributed approximately 90,000 tons. The total increase was approximately 170,000 tons.
2. The import dependency remains at a high level, but attention should be paid to geopolitical disturbances.
In the first five months of 2025, China's zinc concentrate imports increased by 52.82% year-on-year. It is expected that the imports will remain at a high level in the second half of the year. However, we need to be vigilant:
The OZ mine in Russia faces the risk of sanctions, which may affect the supply of 10-15 thousand tons.
The potential geopolitical disruptions to the transportation of minerals at Kipushi in the Democratic Republic of the Congo.
3. Structural contradictions under a situation of abundant supply
Short-term: Domestic TC has risen to 3800 yuan/ton, while imported TC has reached 65 US dollars/dry ton. The recovery of the refining plant's profits has driven the recovery of the production rate.
In the long term: Slippage in mine grades (such as a 10,000-ton reduction in production at the Yauli mine in Peru) and rising environmental costs may constrain the growth rate of supply.
Conclusion: In the second half of 2025, the general trend of abundant zinc supply is highly likely to persist. However, geopolitical factors, the progress of mine production, and the decline in ore grade may lead to temporary supply tightness.
II. Zinc Price Trend: Under the influence of supply and demand dynamics, the price is expected to exhibit a fluctuating pattern of "initially high and then gradually decreasing".
Demand side: The traditional sectors are weak, while the emerging sectors offer limited support.
Traditional consumption:
Infrastructure: Zinc consumption increased by 200,000 tons (1%) under the fiscal stimulus, but real estate investment decreased by 15% year-on-year, which negatively affected demand.
Automobiles: Global automobile production and sales have seen a slight increase (China +3.6%), and the demand for zinc (galvanized sheet) used in new energy vehicles remains stable.
Emerging fields:
The demand for galvanized steel for photovoltaic racks is increasing, but the overall growth is limited and it is difficult to make up for the decline in the real estate sector.
2. Macro and Inventory: The Battle between the US Dollar Index and Low Inventory
Macro: Expectations for the Fed to cut interest rates have weakened, and the strengthening of the US dollar index may curb zinc prices.
Inventory: The LME inventory is at a low level (approximately 250,000 tons), but the accumulation of domestic social inventory may put pressure on prices.
3. Price range forecast: Logical support at the price range of 21,000 - 23,000 yuan per ton.
Breaking through the level of 23,000 yuan per ton:
Supply-side tightened unexpectedly (such as large-scale shutdowns of overseas mines);
There was a significant surge in demand (with a major relaxation of China's real estate policies).
The condition of falling below 21,000 yuan per ton:
Supply remains abundant and demand growth has fallen short of expectations.
The US dollar index has risen sharply, and global macro risks have intensified.
Conclusion: In the second half of 2025, the zinc price is expected to fluctuate within the range of 21,000 - 23,000 yuan per ton. A breakthrough will require strong stimulus, and a fall will require an intensification of supply shortage.
III. Risks and Opportunities: Focus on Four Core Variables
Progress of overseas mine production: If projects such as Kipushi and OZ are delayed, it may lead to a tightening of supply.
Dollar index fluctuations: Changes in the Fed's policy or shifts in global risk appetite affect the flow of funds;
Technical signal: If zinc on the LME falls below the support level of $2650 per ton, it may trigger a chain of selling.
IV. Strategy Suggestions: Implementing interval operations, focusing on structural opportunities
Smelting enterprises: Taking advantage of the window of rising TC, lock in long-term supply contracts;
Trader: Short positions at the price range of 22,000 - 23,000 yuan/ton when the price rises, and set up long positions around 21,000 yuan/ton.
Downstream enterprises: Focus on demand-driven procurement, and pay attention to opportunities for zinc-aluminum and zinc-magnesium alloy substitution.
