1. Report Industry Investment Rating - Zinc: Bullish [1] 2. Core Viewpoints - In 2026, the growth rate of global zinc ore production will decline, and the increment will mainly concentrate in China. The overseas increment will be mainly non - standard ore. The import of zinc ore may be restricted by the price ratio. The mine - smelting balance will tighten, the TC operation center will be lower than in 2025, and the zinc price operation center will be higher [2][165]. - In 2026, domestic zinc smelters are expected to continue to release production capacity, while overseas smelters' resumption of production will be restricted. Domestic demand growth will slow down, with infrastructure still providing support and durable consumption under pressure. External demand, especially from emerging markets, is expected to perform well. The zinc price may maintain a pattern of domestic weakness and overseas strength, and the zinc ingot export window may open periodically [3][165]. - The decline in the TC center will support the zinc price in the long - term. The upper limit of the zinc price depends on demand and the macro - environment. In 2026, the zinc price is expected to rise, with the Shanghai zinc price in the range of 【21600, 25200】 and the LME zinc price in the range of 【2750, 3500】. It is recommended to buy on dips in the medium - term and focus on inter - period reverse arbitrage and internal - external positive arbitrage opportunities [4][170]. 3. Summary by Directory 3.1 Market Review - In 2025, due to the expectation of supply - demand surplus caused by the zinc ore loosening cycle, SHFE zinc became a short - position variety in most capital strategies. The annual shock center of SHFE zinc decreased slightly year - on - year, while that of LME zinc increased marginally. The core reason for the price differentiation between the two was the structural imbalance of the global supply chain [16]. - The cycle from loose zinc ore to loose zinc ingot in 2025 was only half - completed in China, and the overseas half remains to be completed. In 2026, the zinc market story may revolve around overseas smelters' resumption of production, price ratio repair, and improvement in domestic and overseas consumption [17]. 3.2 Supply Side 3.2.1 Mine End - In 2025, overseas mines had a smooth production, and the mine end continued to advance along the loose - cycle. The increment mainly came from overseas mines, and domestic smelters' production capacity release mainly relied on imported ores. The main reasons for the strong performance of overseas mines were the continuous output of resumption and production - increase projects, driven by factors such as the decline in energy prices, fewer extreme weather events, and improved interest - rate environment [20][22]. - From 2025 to 2030, the annual growth rate of zinc ore production is expected to gradually decline, and after 2030, the global zinc ore production will enter a downward channel. In 2026, overseas mines are expected to increase production by about 21.8 million tons, and the increment that can be realized with a high probability is about 12 million tons. In China, domestic zinc ore is expected to enter a production - increasing period, with an expected increment of 21.8 million tons without considering the implementation rate [30][31][37]. - In 2025, China's zinc concentrate import dependence was about 40%, an increase of about 5.8 percentage points compared with 2024. In 2026, domestic zinc concentrate supply may face the problem of import bottlenecks again. The TC center has shifted from a significant upward trend to a downward trend, indicating that the loosest point of zinc ore supply has passed [40][41]. 3.2.2 Smelting End - In 2025, the global zinc ingot production increased slightly year - on - year, showing a pattern of rising in the East and falling in the West. Domestic smelters fully released production capacity, while overseas smelters significantly reduced production. The reasons for overseas smelters' production reduction were the suppression of the benchmark processing fee and the extrusion of domestic smelters' production capacity [49][53]. - In 2026, overseas smelters will mainly focus on resuming production, but the resumption speed may be slow, and the actual zinc ingot increment may be lower than the theoretical calculation, with a neutral expected increment of about 140,000 tons. Domestic smelting production capacity is expected to continue to be released, but the production - increasing space will be relatively limited [59][61]. - In 2025, the proportion of domestic and global recycled zinc production decreased marginally. In 2026, the supply of recycled zinc raw materials may improve marginally, but the increase in recycled zinc production will be limited. In 2025, the import of zinc ingots decreased, and in 2026, the long - term import order volume of zinc ingots may decline significantly, and China may even become a net exporter in some months [67][73]. 3.2.3 Mine - Smelting Balance - In 2026, the overseas zinc ore increment will decline year - on - year, while domestic ore is expected to increase significantly. The mine - end increment is difficult to meet the joint release of domestic and overseas smelting production capacity, and the loosest stage of the mine end may have passed. The TC oscillation center at home and abroad will move down, supporting the zinc price. In the long - term, the resumption environment of overseas smelters in 2026 is still not optimistic [78]. 3.3 Demand Side 3.3.1 Initial - Stage Demand - In 2025, the initial - stage demand for zinc was mediocre, and the downstream operating rate was at a relatively low - to - neutral level. The galvanizing field mainly fluctuated with infrastructure and export demand, while the die - casting zinc alloy was affected by construction demand, and the zinc oxide field showed demand differentiation. The downstream replenishment willingness was still low, and the finished - product inventory was at a low level, indicating strong terminal consumption ability [83][85]. 3.3.2 Traditional Demand - In 2025, the zinc consumption in the infrastructure field improved limitedly. The issuance of new special bonds was relatively stable, but the funds allocated to actual infrastructure projects decreased. The actual operation of infrastructure investment was weak. In 2026, the infrastructure is expected to be optimistic, with an increase in new special bonds and more projects driven by the central government and policies, and the zinc consumption in the infrastructure field is expected to increase by 3.5% year - on - year [96][100][108]. - The real estate is still in the inventory clearance cycle, and the demand for zinc in the construction sector is expected to continue to be dragged down in 2026, but the drag amplitude will be weakened, with an expected zinc consumption growth rate of - 9% [111]. 3.3.3 Durable Consumption Demand - In 2025, the demand for durable consumer goods was strong, mainly driven by policies and exports. In 2026, the domestic demand for automobiles and home appliances may face growth pressure, with an expected growth rate of about 0.5% for automobile zinc consumption and - 2% for home appliance zinc consumption [114][125][127]. 3.3.4 Overseas Demand - In 2025, the export of zinc - processed products increased significantly, and the overseas zinc consumption gradually recovered. In 2026, the export of zinc - processed products is expected to maintain high - level growth, and the overall overseas zinc consumption is expected to grow by 2.8%, especially in emerging regions [135][143][157]. 3.4 Inventory Side - In 2025, the global zinc ingot visible inventory showed an oscillatory decline trend. The increase in domestic social inventory was not enough to offset the decline in LME inventory. The inventory in the industrial chain increased, and the accumulation of domestic social inventory was limited [158]. 3.5 Investment Suggestions - Fundamental Outlook: The mine - smelting balance will tighten, and the zinc price operation center may move up. The zinc ingot balance may show domestic surplus and overseas tightness, and the zinc price may maintain a pattern of domestic weakness and overseas strength [165]. - Trading and Price Outlook: The decline in the TC center will support the zinc price in the long - term. The zinc price is expected to rise in 2026, with the Shanghai zinc price in the range of 【21600, 25200】 and the LME zinc price in the range of 【2750, 3500】. It is recommended to buy on dips in the medium - term, focus on inter - period reverse arbitrage and internal - external positive arbitrage opportunities [170]. - Rhythm and Risk: Before the long - term mine - smelting order is finalized, the zinc price is still likely to rise. After April, the zinc price may be under pressure. There is a possibility of the market pre - trading the long - term shortage expectation of zinc elements. Risks include the progress of Huoshaoyun's production, tariff risks, domestic and overseas demand uncertainties [172].