[SMM Analysis] China’s October refined zinc production to see only modest recovery amid widening losses

SMM, October 8:

In September 2026, China's refined zinc production fell 1.9% MoM and 6.4% YoY. Cumulative production at smelters, January-September, declined more than 0.1% YoY, coming in below expectations. Within this, China's zinc alloy production rose by 3,000 mt MoM in September. Smelter production in September exceeded expectations mainly because some large plants did not see the anticipated reductions. The September decline was mainly driven by supply from Shaanxi, Inner Mongolia, Hunan, Anhui, and Henan, while production resumptions after maintenance and production ramp-ups in Hunan, Yunnan, and Gansu contributed the bulk of the growth.

SMM expects China's refined zinc production in October 2026 to increase 0.6% MoM and decline 8.5% YoY. Cumulative smelter production, January-October, is expected to fall more than 1% YoY. The slight rebound in October smelter production is mainly driven by maintenance recoveries and new capacity releases at smelters in Inner Mongolia, Hunan, Guangxi, Xinjiang, and Henan, while reductions are concentrated at smelters in Henan, Qinghai, and Gansu due to post-holiday maintenance, with a small amount of voluntary production cuts due to profitability issues. Overall, as sulphuric acid prices and TCs continue to decline, smelter losses are widening, and some smelters have postponed their originally scheduled production resumptions, leaving overall production below expectations.

Overall, with sulphuric acid prices and TCs lingering at low levels, zinc smelters' losses widened. In addition to originally scheduled maintenance plans, some smelters postponed their planned production resumptions due to profit losses. Meanwhile, considering full-year profit targets, some smelters may cut production at year-end. Furthermore, ferrous metals prices fell, and with steel mills in the off-season for production amid Q4 environmental protection measures, secondary zinc raw materials remained tight. With raw material prices at high levels, secondary zinc smelters struggled to achieve production growth, leaving overall output below expectations. Full-year refined zinc production is expected to decline by around 60,000 mt YoY.

Data source statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only, not constituting any decision-making advice.