2026 Low-Grade Zinc Oxide Market Half-Year Review [SMM Analysis]

SMM, July 9:

In H1 2026, the low-grade zinc oxide market was characterized by tight supply, rising costs, demand under pressure, and prices fluctuating at highs. After the Chinese New Year, enterprises gradually resumed operations, but constrained by tight supply of raw materials such as steel dust and electric furnace dust, as well as persistent invoice issues, the industry's operating rate and production release were limited. Meanwhile, downstream demand recovery remained modest, and acceptance of high-priced raw materials was insufficient. The market was locked in a tug-of-war between cost support and buyers pushing for lower prices, with prices drifting higher.

Supply side, raw materials like steel dust and electric furnace dust remained tight throughout H1. Blast furnace maintenance, periodic electric furnace stoppages, and invoice issues jointly limited raw material circulation, making procurement more difficult for enterprises and driving costs higher. Although producers gradually resumed production, some low-grade zinc oxide makers were forced to cut or halt production due to tight raw material supply. The industry’s overall output recovery fell short of expectations, keeping supply tight.
Price side, low-grade zinc oxide prices drifted higher in H1. Rising coal prices, higher raw material procurement costs, and the pass-through of invoice costs provided strong support. Coupled with tight spot availability, enterprises' willingness to hold prices firm strengthened, lifting the price center. However, given generally tepid downstream orders, purchases were largely need-based, capping high-price transactions. The market operated under a pattern of “cost-driven increases, demand pushing for lower prices.”
Looking ahead to H2, the supply of raw materials such as steel dust and electric furnace dust is expected to remain tight. Due to ongoing steel mill maintenance and invoice issues, raw material circulation is unlikely to improve significantly. Enterprise procurement costs are expected to stay high, and the cost side will continue to provide strong support for low-grade zinc oxide prices. At the same time, constrained by raw material supply and cost pressure, there is limited room to raise operating rates and output, so market supply is projected to remain tight.

Demand side, downstream buyers in traditional sectors are expected to continue purchasing mainly on a need-to basis, with limited acceptance of high-priced raw materials. However, due to tight supply of zinc concentrates, some smelters will still turn to low-grade zinc oxide as an ore supplement, offering a degree of support to market demand and potentially offsetting some pressure from weak end-use consumption. Overall, the low-grade zinc oxide market in H2 will continue to see a pattern of "tight raw material supply, high costs, and tug-of-war between sellers and buyers." Driven by cost support and restocking demand from smelters, prices are expected to still have some upside room, but limited.