China has moved to a small net exporter position for refined zinc after a notable increase in shipments during the fourth quarter, according to Bank of America. The development reverses the country's prior pattern as a consistent zinc importer and reflects shifting economics and supply dynamics in the global market.
The export window opened when London Metal Exchange forward curves for 2025 moved into deep backwardation, creating price incentives that made shipments from China commercially viable. That dislocation encouraged smelters in China to ship more refined metal abroad. Since then, LME inventories have been rebuilt and the forward curve has reverted to contango, reducing the immediate arbitrage for exports, but the Q4 surge materially altered trade flows and market positioning.
Chinese smelters have expanded market share as global mine output tightened and treatment charges eased, pressuring Western producers. The combined effect of higher relative production and lower treatment charges allowed Chinese refined units to capture a larger portion of global demand. Bank of America notes that China’s operators are now the largest refined zinc producers worldwide.
On balance, Bank of America expects a modest global surplus in both zinc concentrates and refined zinc this year as mine supply recovers. At the same time, the bank highlighted a growing dependence outside China on Chinese refined production. That structural reliance could provide a degree of price support for zinc if markets tighten again, according to the bank’s assessment.
Geopolitical tensions in the Middle East add an additional layer of uncertainty to the zinc market. Iran’s Mehdiabad mine produces roughly 100,000 tonnes of zinc annually, equivalent to about 1% of global supply, and currently exports output as feedstock to Chinese smelters. Bank of America warned that a prolonged conflict could remove these volumes from the market. Rising natural gas prices tied to the conflict would also squeeze smelter margins, particularly for producers outside China who are already under pressure from tighter margins and competitive dynamics.
Higher energy costs and potential supply-chain disruptions stemming from the conflict could also damp demand for zinc. Bank of America had been forecasting muted growth in zinc consumption even before the onset of hostilities.
Western smelters are pursuing a range of responses. Some companies, including Korea Zinc and Nyrstar, are diversifying into production of critical minerals, leveraging government support to underpin those moves. Toho Zinc has closed its primary zinc smelting operations to pivot toward zinc recycling. Nyrstar has opted to sell its U.S. zinc business to Korea Zinc to concentrate its efforts on Australia and Europe. Korea Zinc is expanding its U.S. footprint by applying operational expertise to mines it acquired from Nyrstar, while Boliden has pursued vertical integration through mine purchases from Lundin.
Historically, regions outside China exported both concentrates and refined zinc. While concentrate surpluses persist in some areas, those same regions may confront refined zinc shortages if China’s smelters continue to grow their share of global refined output. That evolving trade pattern raises questions about where refined metal will be sourced in periods of tighter supply.
The combination of LME price curve moves, Chinese smelter expansion, concentrated feedstock flows, and geopolitical risk is reshaping zinc market dynamics. Bank of America’s view of a small surplus this year is tempered by the recognition that increasing reliance on Chinese refined capacity and potential disruptions could influence price behavior going forward.