Recently, SHFE zinc has been highly sensitive to macro headwinds, with overall market trading sentiment remaining subdued. On the fundamental side, tightening concentrate supply coupled with declining smelter by-product returns offered support to zinc prices; however, weak downstream consumption and persistently high inventories capped the upside. On June 8th, domestic zinc concentrate TCs (Treatment Charges) held steady, as did imported zinc concentrate prices and mainstream TC quotes.
Raw material shortages in southern China have triggered cross-regional competition, with smelters in the south competing for northern-sourced ore, driving a broad-based downward adjustment in TCs. Smelter profit margins were severely compressed, with operations barely sustained by sulfuric acid and other by-product revenues. Under the dual pressure of feed shortages and losses, some smelters have initiated substantive output cuts.
Domestic capacity shortfalls and import disruptions sustain the raw material gap. The rupture of long-term contract shipments from Iran and negative import TCs, which have dampened traders' willingness to supply. TCs will stay at low levels in the near term.
