On June 3, domestic zinc concentrate Treatment Charges (TCs) held steady, while prices for both domestic and imported zinc concentrates edged up from the prior session. Mainstream spot TC quotes were unchanged day-on-day.
Mine supply fell short of expectations, with both domestic and imported raw material inflows constrained. Negative import TCs have dampened traders' willingness to supply, making it difficult to fill the domestic concentrate shortfall. Smelter profit margins are severely compressed, and operations are barely sustained by sulfuric acid and by-product precious metal revenues.
Under the dual pressure of feed shortages and losses, some smelters have initiated substantive output cuts. Tight concentrate availability coupled with smelter curtailments support zinc prices; in the near term, TCs are biased to the downside.
Overnight on June 2, SHFE zinc gapped higher on macro tailwinds, trading sideways near the overnight highs during the day with subdued early-session trading activity.
Overall, tighter concentrate supply and declining by-product returns lend fundamental support to zinc prices; however, sluggish downstream consumption and persistently high inventory levels cap the upside.
