Chinese zinc smelters risk run cuts as capacity outpaces demand

Chinese zinc smelters, which account for over half of global supply, face growing pressure to lower run rates as capacity expansion outpaces demand, according to Beijing Antaike Information Co.

“Risks for idling excess capacity are building as Chinese zinc demand nears its peak,” the state-owned researcher said in a note on Wechat. A reliance on imports for more than 30% of zinc concentrate supply has also curbed production, after processing fees plunged last year, it said.

Spot fees to process zinc concentrate plunged to negative levels last year amid tightening global mine supplies, before recovering to positive levels this year. Zinc smelters are now on a path similar to copper refiners, where plants in Japan and the Philippines have started cutting production and shutting units.

Chinese zinc smelting capacity is projected to rise by 430,000 tons this year, with new plants by Jiyuan Wanyang Smeltery Group Co. and Xinjiang Huoshaoyun Lead-Zinc Mine Co. coming online, according to Antaike. Run rates already dropped to around 82% last year from over 90% in 2010, it said.

The country’s refined zinc output continued to drop this year, down around 3% to 2.92 million tons in the first five months, after falling 3.6% in 2024, according to Chinese government data.

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