Market Overview - As of January 2, the London Metal Exchange (LME) reported zinc registered warehouse stocks at 97,925 tons, with cancellations of 8,400 tons, resulting in a net decrease of 750 tons. Total zinc inventory stands at 106,325 tons, down by 1,300 tons [1] - The Shanghai zinc futures inventory recorded 69,793 tons, a decrease of 3,170 tons compared to the previous trading day [2] Production Forecast - Refined zinc production is projected to be 552,100 tons in December 2025, which is below expectations. However, production is expected to increase to 569,400 tons in January 2026 [3] Institutional Insights - According to Nanhua Futures, the overall market sentiment is warming. The treatment charges (TC) have stabilized due to the opening of the import window, but are expected to decline in January. The domestic raw material supply remains tight in the short term, while the supply side is expected to loosen in the long term. High zinc prices are suppressing downstream consumption, and domestic inventory reduction due to exports and production cuts is providing support for Shanghai zinc prices. The outlook suggests that while low domestic inventory supports prices, there is a lack of upward driving force in the fundamentals, leading to a range-bound market [4] - Guangzhou Futures anticipates that the medium to long-term focus for zinc prices will gradually shift upward. However, due to the traditional off-season in the first quarter, short-term upward potential is limited. Prices are expected to trend upward after the holiday, followed by a transition into a range-bound market [5]

Group 1 - The core viewpoint indicates that the zinc market is under pressure due to a rebound in the US dollar and a decline in the stock market, leading to a slight drop in London zinc prices by 0.08% to $3084 per ton [1][2] - The domestic refined zinc exports are replenishing overseas inventories, causing a significant drop in LME premiums, while the disparity between domestic and international markets is decreasing [2] - The demand side is showing weakness, with a seasonal downturn and lackluster pre-holiday consumption, resulting in pressure on spot premiums and a decline in confidence among holders [2] Group 2 - The recent drop in copper and tin prices has negatively impacted market sentiment, contributing to the softening of zinc prices [1] - Despite geopolitical uncertainties providing short-term risk premium support for oil prices, which limited the decline in zinc prices, overall trading activity remains sluggish [1][2] - The outlook suggests that spot zinc prices are likely to decline further [3]

Report Title - Supply Tightness and Weakening Demand: Shanghai Zinc Maintains a Sideways - Bullish Trend [1] Report Date - December 29, 2025 [1] 1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints - The zinc market has a supply - tight and demand - weak situation, and Shanghai zinc is expected to maintain a sideways - bullish trend. The tight supply is due to smelters' production cuts caused by raw material issues, while the demand shows a weakening trend overall [1][8][9] 3. Summary by Directory 3.1 Weekly Review - **Industry Data**: Domestic zinc ore is in short supply, and zinc ore processing fees are falling rapidly, providing some support for zinc prices. In December, the decline in domestic zinc concentrate processing fees continued. The domestic zinc concentrate production decreased by 5.86% month - on - month to 31.14 million tons, while the import volume increased by 52.27% to 51.90 million tons. The domestic zinc ingot production decreased by 3.56% to 59.52 million tons, and the import volume decreased by 16.94% to 1.88 million tons. The export volume increased by 402.59% to 4.2816 million tons. The total supply increased by 2.14% month - on - month, and the apparent demand decreased by 0.86% [8] - **Futures Prices**: Last week, the Shanghai - London ratio dropped to around 7.4, and the zinc ingot import window remained closed. Overseas, strong economic data boosted demand prospects, but the increase in overseas inventories put pressure on LME zinc prices. Domestically, the overall macro environment was positive, and smelters' maintenance due to raw material issues continued, supporting Shanghai zinc prices. It is expected that the Shanghai - London ratio will continue to decline this week [9] - **Spot Prices**: In Guangdong, inventory is decreasing, the market premium is rising, but the downstream consumption is average, and it is expected to fluctuate this week. In Shanghai, some traders cleared their inventories at the end of the year, and the downstream consumption was in the off - season. It is expected that the spot supply will be low and the premium will not decline significantly. In Tianjin, the premium increased last week but is expected to decline due to new environmental warnings. In Ningbo, the premium was high but is expected to fluctuate this week due to poor downstream orders [12] 3.2 Supply Side - **Processing Fees**: The weekly average of SMM Zn50 domestic TC decreased by 100 yuan/metal ton to 1,500 yuan/metal ton, and the SMM imported zinc concentrate index decreased by 2.74 dollars/dry ton to 47.39 dollars/dry ton. At the end of the month, the negotiation of January zinc concentrate processing fees between domestic smelters and mines is ongoing. The import market was quiet during the Christmas holiday, with few offers [15] - **Zinc Concentrate Production**: The production of zinc concentrate is affected by factors such as smelter production cuts and import window opening [15] - **Zinc Concentrate Inventory**: The total inventory of SMM zinc concentrate at major Chinese ports was 2.7 million physical tons, a decrease of 0.67 million physical tons from the previous week. Huangpu Port and Fangchenggang Port contributed to the main reduction [8] - **Refined Zinc Production**: In December, refined zinc production continued to decline. It is estimated that the production in December will decrease by 14,000 tons to 512,000 tons, with a daily - average decrease of 5.8%. The cumulative production from January to December is expected to be 6.168 million tons, a year - on - year increase of 8.8% [28] - **Mineral and Ingot Imports**: In November 2025, the import of zinc concentrate was 519,000 tons (physical tons), a month - on - month increase of 52.27% and a year - on - year increase of 13.84%. The import of refined zinc was 18,229.93 tons, a month - on - month decrease of 3.22% and a year - on - year decrease of 48.15% [34] - **Import and Export Profits**: The import window remained closed, and the possibility of opening within the year was low. The export window closed in December [36] 3.3 Demand Side - **Downstream Prices**: The prices of downstream zinc products such as Zamak5 zinc alloy, Zamak3 zinc alloy, zinc oxide, and hot - dipped galvanized products are presented in the report [39] - **Downstream开工情况**: The weekly galvanizing开工 rate increased by 1.05% to 56.67% due to the lifting of environmental protection restrictions and the resumption of production by northern enterprises, but the demand is weakening. The weekly zinc oxide开工 rate increased by 2.08% to 57.04% as some enterprises recovered from environmental protection - related production cuts and had better demand. The weekly die - casting zinc alloy开工 rate increased by 8.09% to 52.80% as some enterprises resumed production and the downstream demand improved [8] - **Downstream Inventory Days**: The inventory data of downstream zinc processing enterprises and smelters' finished products are presented, including raw material inventory, finished product inventory of zinc alloys and zinc ingots, and inventory days [46] 3.4 Inventory Changes - **Futures Inventory**: LME zinc inventory increased by 6.98% to 106,900 tons, and SHFE zinc inventory increased by 1.83% to 42,100 tons [8] - **Spot Inventory**: As of December 25, the total SMM zinc ingot inventory in seven regions was 114,700 tons, a decrease of 7.87% from December 18. The inventory in Tianjin and Guangdong decreased, while the inventory in Shanghai remained unchanged. The bonded area inventory remained stable at 3,300 tons [8] 3.5 Macro - disturbances - **Macro - disturbance Factors**: The exchange rate, Shanghai - London ratio, US dollar index, and US federal funds target rate are presented in the report, but no in - depth analysis of their impact on the zinc market is provided [57]

1. Report Industry Investment Rating - Not provided in the document 2. Core View of the Report - The report predicts that Shanghai zinc will fluctuate and adjust, with support at 22,900 yuan/ton and resistance at 23,400 yuan/ton [5]. 3. Summary by Relevant Catalogs 3.1. Weekly Key Points Summary - **Market Review**: This week, the main contract of Shanghai zinc fluctuated strongly, with a weekly increase of 0.46% and an amplitude of 1.78%. As of the end of this week, the closing price of the main contract was 23,170 yuan/ton [5]. - **Market Outlook**: Macroscopically, the US has ended the previous administration's trade investigation on Chinese chips and will not impose additional tariffs on Chinese chips for the next 18 months. Fundamentally, upstream zinc ore imports have declined, and domestic smelters' production is expected to decrease significantly. The export window may close again. On the demand side, the downstream market is gradually entering the off - season, with the real - estate sector dragging down, and the infrastructure and home - appliance sectors weakening, while the automobile and other sectors have some policy - supported highlights. Domestic inventories continue to decline, while LME zinc inventories have increased significantly [5]. 3.2. Futures and Spot Market - **Price and Ratio**: As of December 26, 2025, the closing price of Shanghai zinc was 23,170 yuan/ton, up 105 yuan/ton or 0.46% from December 19, 2025. As of December 24, 2025, the closing price of LME zinc was 3,086.5 US dollars/ton, up 13 US dollars/ton or 0.42% from December 18, 2025. The Shanghai - London ratio has rebounded [10]. - **Net Position and Open Interest**: As of December 26, 2025, the net position of the top 20 in Shanghai zinc was 5,746 lots, an increase of 678 lots from December 19, 2025. The open interest was 200,417 lots, an increase of 6,815 lots or 3.52% from December 19, 2025 [16]. - **Price Spreads**: As of December 26, 2025, the aluminum - zinc futures spread was 765 yuan/ton, a decrease of 115 yuan/ton from December 19, 2025. The lead - zinc futures spread was 5,615 yuan/ton, a decrease of 570 yuan/ton from December 19, 2025 [19]. - **Spot Premiums**: As of December 26, 2025, the spot price of 0 zinc ingots was 23,230 yuan/ton, unchanged from December 19, 2025. The spot premium was 55 yuan/ton, a decrease of 100 yuan/ton from last week. As of December 24, 2025, the LME zinc near - month to 3 - month spread was - 28.26 US dollars/ton, a decrease of 6.69 US dollars/ton from December 17, 2025 [25][26]. - **Inventories**: As of December 24, 2025, LME refined zinc inventories were 106,875 tons, an increase of 9,175 tons or 9.39% from December 17, 2025. As of December 19, 2025, SHFE refined zinc inventories were 76,017 tons, a decrease of 4,560 tons or 5.66% from last week. As of December 25, 2025, domestic refined zinc social inventories were 111,400 tons, a decrease of 7,300 tons or 6.15% from December 18, 2025 [29]. 3.3. Industry Situation - **Upstream**: In October 2025, global zinc ore production was 1.1009 million tons, a month - on - month increase of 1.21% and a year - on - year increase of 4.87%. In November 2025, the import volume of zinc ore concentrates was 519,018.96 tons, a month - on - month increase of 52.31% and a year - on - year increase of 14.06% [35]. - **Supply - Side**: - **Global Supply Gap**: In October 2025, global refined zinc production was 1.2187 million tons, with a year - on - year increase of 108,400 tons or 9.76%. Consumption was 1.2193 million tons, a year - on - year increase of 44,200 tons or 3.76%. The global refined zinc gap was 600 tons, compared to a gap of 64,800 tons in the same period last year. The WBMS reported a global zinc market supply - demand balance of - 35,700 tons in September 2024 [40][41]. - **Production Forecast**: In November 2025, zinc production was 654,000 tons, a year - on - year increase of 13.3%. From January to November 2025, the cumulative zinc output was 6.842 million tons, a year - on - year increase of 9.5%. However, production is expected to decline [44]. - **Export Window**: In November 2025, the import volume of refined zinc was 18,229.93 tons, a year - on - year decrease of 48.15%. The export volume was 42,815.55 tons, a year - on - year increase of 8748.45% [47]. - **Downstream**: - **Galvanized Sheets**: From January to November 2025, the inventory of galvanized sheets (strips) of major domestic enterprises was 942,600 tons, a year - on - year increase of 9.06%. In November 2025, the import volume of galvanized sheets (strips) was 36,700 tons, a year - on - year decrease of 19.91%. The export volume was 317,900 tons, a year - on - year increase of 11% [50][51]. - **Real Estate**: From January to November 2025, the new housing construction area was 534.567 million square meters, a year - on - year decrease of 20.58%. The housing completion area was 394.5393 million square meters, a year - on - year decrease of 17.58%. The funds in place of real - estate development enterprises were 8.514519 trillion yuan, a year - on - year decrease of 11.9%. Personal mortgage loans were 1.1786 trillion yuan, a year - on - year decrease of 15.1% [56][57]. - **Infrastructure**: In November 2025, the real - estate development climate index was 91.9, a decrease of 0.52 from last month and 0.61 from the same period last year. From January to November 2025, infrastructure investment increased by 0.13% year - on - year [62][63]. - **Home Appliances**: In November 2025, the refrigerator production was 9.442 million units, a year - on - year increase of 5.6%. From January to November 2025, the cumulative refrigerator production was 99.342 million units, a year - on - year increase of 1.2%. In November 2025, the air - conditioner production was 15.026 million units, a year - on - year decrease of 23.4%. From January to November 2025, the cumulative air - conditioner production was 245.361 million units, a year - on - year increase of 1.6% [65]. - **Automobiles**: In November 2025, China's automobile sales volume was 3,428,998 units, a year - on - year increase of 3.4%. The automobile production volume was 3,531,579 units, a year - on - year increase of 2.76% [70].

Group 1 - The core viewpoint of the articles indicates that the zinc market is experiencing downward pressure due to light trading during the Christmas holiday and falling oil prices, leading to a decline in zinc prices [1][2] - Overnight London zinc futures showed a downward trend, closing at $3087 per ton, down $10 or 0.32%, with a trading volume of 5944 lots, a decrease of 4941 lots [1] - The domestic zinc market is facing tight supply conditions, with a rapid decline in processing fees for imported zinc concentrate, which increases production pressure on smelters [2] Group 2 - The macroeconomic environment is characterized by a cautious market sentiment, influenced by a declining US dollar index and mixed factors such as rising stock markets and falling oil prices [1] - There is a prevailing concern about the future direction of the market as year-end effects become more pronounced, with weak purchasing intentions from downstream sectors leading to poor spot transaction volumes [2] - The expectation is that zinc prices will continue to fluctuate within a range, with a potential decline in current zinc prices due to the lack of strong fundamental drivers and the holiday season affecting overseas markets [2]

Group 1 - Today's Shanghai zinc futures showed weak performance, with the main contract closing at 23,090 CNY/ton, up 15 CNY, a 0.07% increase from the previous settlement price of 23,075 CNY/ton [1] - The trading volume for the Shanghai zinc 2602 main contract was 133,845 lots, a decrease of 579 lots, while the open interest increased by 2,495 lots to 93,107 lots [1] - The latest price for London zinc was reported at 3,084.5 USD, an increase of 6.5 USD [1] Group 2 - Domestic spot zinc prices experienced a slight decline, with the average price for 0 zinc reported at 23,100 CNY/ton, down 40 CNY, and 1 zinc at 23,020 CNY/ton, also down 40 CNY [1][2] - The current domestic social inventory of zinc has decreased to 76,000 tons, marking a four-month low, which provides some support for zinc prices [3] - The demand side remains weak, particularly in the galvanizing industry, where operational levels are declining due to environmental restrictions and poor end-user demand, leading to a subdued market for zinc [3]

Core Viewpoint - The geopolitical situation and interest rate cut expectations are in a tug-of-war, leading to a stable overnight performance in zinc prices, with tight supply and declining processing fees impacting the market dynamics [1][2]. Group 1: Market Performance - Overnight London zinc showed weak fluctuations, closing at $3078 per ton, with a trading volume of 7997 lots, a decrease of 497 lots, and an open interest increase of 449 lots to 227,461 lots [1]. - The Shanghai zinc market also experienced weak fluctuations, with the main contract closing at 23,025 yuan per ton, down 50 yuan, a decline of 0.22% [1]. Group 2: Supply and Demand Dynamics - Domestic and international ore supply is tightening, with processing fees reduced by 1250 yuan per metal ton since early September, indicating a reality of supply tightness [2]. - The actual output of smelters in November did not meet expectations due to raw material supply constraints and low processing fees affecting profits, with further production declines expected in December [2]. - Domestic social inventory continues to decrease, providing support for zinc prices, but demand remains lackluster, particularly in the galvanizing sector where operating rates are average [2]. Group 3: Industry Challenges - Environmental policies in northern regions are restricting the operation of heavy trucks below the National VI standard, leading to extended raw material and finished product turnover cycles, which is expected to keep operating levels stable [2]. - In the die-casting zinc alloy sector, poor end-user demand has resulted in inventory buildup, with high zinc prices suppressing consumption and downstream buyers only maintaining essential purchases [2].

Group 1 - International oil prices have seen an expanded decline, contributing to a bearish sentiment in global stock markets, which has pressured zinc prices [1] - Overnight, London zinc prices fell for the third consecutive day, closing at $3035 per ton, down $60 or 1.94%, with trading volume increasing by 5810 contracts [1] - Domestic zinc concentrate production in November was 311,400 tons, a decrease of 19,400 tons from October, indicating a tightening supply due to seasonal production cuts [2] Group 2 - The processing fees for domestic zinc ore have rapidly decreased, with domestic processing fees dropping to 1600 yuan per metal ton, and imported ore processing fees falling to $50.56 per dry ton [2] - As of the end of November, smelter raw material inventories have decreased to 377,000 metal tons, with available days of inventory dropping to 20.8 days, indicating a tightening supply situation [2] - Domestic zinc ingot inventories have continued to decline, with a weekly decrease of 12.34%, reaching the lowest level in three and a half months, suggesting strengthened support for zinc prices [2]

Core Viewpoint - The zinc market is currently driven by macroeconomic benefits and tight fundamentals, maintaining a strong short-term trend, but there are risks of price increases due to weakened downstream purchasing intentions, leading to expectations of high-level fluctuations in the future [3]. Group 1: Zinc Prices - The market price for zinc ingots (Zn99.995) in Shanghai is reported at 23,230 CNY/ton, with variations in prices across different regions, such as 22,940 CNY/ton in Guangdong and 23,450 CNY/ton in Zhejiang [1]. - The closing price for the main zinc futures contract on December 16 is 23,030 CNY/ton, reflecting a decline of 1.62%, with a daily trading volume of 138,540 lots [1]. Group 2: LME Zinc Inventory - As of December 15, LME zinc inventory stands at 64,500 tons, an increase of 2,550 tons or 4.12% from the previous day, with a cumulative increase of 6,725 tons or 11.65% over the past week [2]. - In the last month, LME zinc inventory has increased by 25,500 tons, representing a significant rise of 65.43% [2]. Group 3: Shanghai Futures Exchange Inventory - On December 15, the Shanghai Futures Exchange reported a zinc inventory of 50,703 tons, a decrease of 579 tons from the previous trading day, with specific regional changes noted [2]. - Guangdong region shows a reduction of 378 tons, while Jiangsu region's inventory increased by 74 tons, and Tianjin region decreased by 275 tons [2]. Group 4: Market Analysis - Current market conditions suggest that while there are positive macroeconomic factors and tight supply, the rapid price increases may accumulate market risks, potentially limiting further upward movement in zinc prices [3]. - Key factors to monitor include the actual production cuts by smelters, the pace of inventory depletion, and changes in macroeconomic sentiment [3].

Report Industry Investment Rating - Unilateral: Cautiously bullish. Arbitrage: Neutral. [5] Core View - Zinc prices have declined, and there is restocking behavior in the spot market. However, social inventories are increasing and are about to exceed the same period of the past five years. The spot liquidity has improved, but procurement remains cautious. The TC of domestic and imported mines continues to rise, leading to higher smelting profits and sustained smelting enthusiasm. The supply is expected to increase. Even during the peak consumption season, the inventory accumulation in China is still expected, and the current inventory accumulation is accelerating. If the peak consumption season expectations are disappointed, zinc prices will face significant pressure and may show a relatively weak trend. Attention should be paid to the impact of overseas inventories. [4] Summary by Relevant Catalogs Spot Market - LME zinc spot premium is $90.60 per ton. SMM Shanghai zinc spot price decreased by 230 yuan/ton to 23,470 yuan/ton, with a spot premium of 70 yuan/ton. SMM Guangdong zinc spot price decreased by 230 yuan/ton to 23,390 yuan/ton, with a spot premium of -10 yuan/ton. Tianjin zinc spot price decreased by 210 yuan/ton to 23,380 yuan/ton, with a spot premium of -20 yuan/ton. [1] Futures Market - On December 15, 2025, the main contract of SHFE zinc opened at 23,480 yuan/ton, closed at 23,430 yuan/ton, down 85 yuan/ton from the previous trading day. The trading volume was 168,578 lots, and the position was 83,302 lots. The highest price during the day was 23,600 yuan/ton, and the lowest was 23,205 yuan/ton. [2] Inventory - As of December 15, 2025, the total inventory of SMM seven - region zinc ingots was 125,700 tons, a decrease of 2,600 tons from the previous period. As of the same date, LME zinc inventory was 64,475 tons, an increase of 2,550 tons from the previous trading day. [3]