June 8, SHFE zinc continued to drift lower, with downstream buyers restocking on dips, but overall trading sentiment remained weak. On the fundamental side, tightening concentrate supply coupled with declining byproduct profits (e.g., sulfuric acid) offer support to zinc prices; however, sluggish downstream consumption and persistently high inventories cap upside potential.
The raw material shortage persisted. Both domestic and imported zinc concentrate Treatment Charges (TCs) held steady at historically low levels. Smelters are relying mainly on byproduct revenues such as sulfuric acid to stay operational, and some plants with limited by-product recovery capacity have already implemented output cuts.
Downstream has entered the traditional off-season with weak new orders. In the near term, incremental domestic mine output is limited and imported concentrates are unlikely to arrive in volume. TCs are expected to remain at rock-bottom levels.
