December Zinc Concentrate TCs Rebound: What is the Supply-Demand Pattern for Domestic Zinc Ore in 2025? [SMM Analysis]

This year, the overall supply-demand imbalance in zinc ore has led to domestic and imported zinc concentrate TCs plummeting to historical lows, highlighting extreme market conditions. From a production perspective, SMM data shows that zinc concentrate production from January to October decreased by 0.22% YoY. Although the Huoshaoyun mine commenced production this year, the overall capacity release has been limited. Additionally, the grade of raw ore in some regions has significantly declined, leading to an expectation of no significant increase in overall zinc ore production this year. What about next year?

Firstly, the main increase in domestic zinc ore production next year is expected to come from the capacity release of newly commissioned mines. By mine, the Huoshaoyun lead-zinc mine started production in July this year, JCC's Yinzhushan Mine officially commenced production in mid-October, and Tibet Xinhu Mining started production in Q3 this year. These mines are expected to produce 20,000 mt (metal content) of lead and zinc annually once fully operational. Although these mines have brought limited incremental production to domestic mining this year, their output is expected to gradually release with increased production time next year. Additionally, some mines that previously expanded capacity will continue to ramp up production and resume operations. Some domestic mines that halted beneficiation plant operations due to earlier infrastructure issues are expected to gradually restart production next year. Overall, domestic mine production in 2025 is expected to increase YoY.

Looking ahead, several new mine commissioning and expansion projects are gradually being disclosed. For example, the Danaopo lead-zinc mine's mining and beneficiation project commenced this year and is expected to start releasing capacity by 2027. The Fankou and Panlong lead-zinc mines also have expansion plans.

From the perspective of TCs, domestic zinc concentrate TCs fell to 1,400 yuan/mt (metal content) this year, with extreme prices below 1,000 yuan/mt (metal content) in some regions. As domestic smelters maintained low operating rates, the days of raw material inventories at smelters continued to recover. In December, domestic zinc concentrate TCs slightly increased MoM, reversing the previous continuous decline. Looking to 2025, with the gradual release of newly commissioned mines domestically and internationally, domestic ore supply is expected to increase, and the overall tight situation may ease compared to this year. The rebound in TCs is expected to continue.