Exclusives: China’s refined zinc output rose to 492,800 mt in July

On August 26, LME three-month zinc rose to around $3,950/mt during intraday trading, its highest level in nearly four years, moving closer to the key $4,000/mt threshold. The rally was supported by a combination of regional supply imbalances in overseas refined zinc markets, a tight nearby structure and increased fund participation. On August 25, the LME cash-to-three-month zinc backwardation stood at approximately $134/mt, while the Cash–September backwardation was around $78.50/mt, indicating continued tightness at the front of the curve. LME zinc inventories stood at approximately 95,100 mt, down 20.7% from the end of June, while warrant holdings remained highly concentrated. Around 17,000 mt of zinc has recently been delivered into LME warehouses, approximately two-thirds of which entered warehouses in Hong Kong. However, with the Chinese export arbitrage window remaining only marginally open, the additional deliveries have yet to materially ease the tight nearby structure in the London market. Fund positioning has further increased zinc prices’ sensitivity to changes in inventories and time spreads. Aggregate long positions held by investment funds in LME zinc have exceeded 110,000 lots, indicating active bullish participation. However, position concentration data have yet to show clear dominance by any single long holder. In the short term, LME zinc may continue to test the $4,000/mt level. Key factors to monitor include the SHFE/LME ratio, Chinese refined zinc exports, the pace of deliveries into LME warehouses, and changes in LME position and warrant concentration.

Nyrstar said its Budel zinc smelter in the Netherlands has completed a 71-day major shutdown and maintenance programme, one of the largest turnarounds undertaken at the site in recent decades. Hundreds of employees and more than 700 contractors participated in the work. Key projects included the installation of a new roaster to replace equipment that had operated for more than 50 years, including the lifting of a 150-tonne section into place. New sulphuric acid absorption towers were also installed, alongside further work on the sulphuric acid plant. These upgrades are expected to improve the smelter’s long-term safety, efficiency and operational reliability. Budel produced 59.1 kt of refined zinc in Q1 2026, down 8.7% year on year. Monthly output fell to around 2kt in May, indicating the scale of the turnaround’s impact on actual production during Q2 and Q3.

As of 15:00 today, the Shanghai zinc main contract 2610 closed at RMB 26,240/ton, with zinc prices fluctuating at high levels. According to SMM data, the spot premium‑discount in Guangdong has moved between ‑140 yuan/ton and ‑80 yuan/ton so far this month, staying within a discount range. Regional social inventory stood at 29,000 tons as of August 26. How will Guangdong spot premium‑discount evolve going forward? This report first analyzes the current market conditions in Guangdong.