1. Report's Industry Investment Rating - Unilateral: Cautiously bullish; Arbitrage: Neutral [6] 2. Core Viewpoints of the Report - The TC of domestic zinc mines continues to decline, and although the zinc ore import window is open due to the convergence of internal and external price ratios after overseas zinc ingot centralized warehousing, the purchasing demand of smelters remains strong, and TC is expected to decline slightly. The current zinc price is undervalued with positive domestic and overseas expectations [1][2] - The production of domestic zinc mines has entered the winter production - reduction cycle, with the output in November 2025 being 311,400 metal tons, 12,000 tons less than expected. The import volume of zinc ore in November 2025 was 519,019 tons, a year - on - year increase of 13.8%, and the cumulative import from January to November was 4,867,942 tons, a year - on - year increase of 33.7%. As of the end of December, the total inventory of the seven major ports in China was 329,000 tons [2] - In December 2025, China's zinc ingot production was 552,000 tons, with a year - on - year increase of 6.85%. It is expected that the production in January will be 569,000 tons, but the actual output may be lower than expected due to the continuous decline of TC. The zinc ingot export window closed in mid - December, but it is still expected to be in a net export state in December. The comprehensive smelting of zinc ingots still faces a loss of about 1,000 yuan/ton. The inventory of zinc ingots has shown a downward trend [3] - The operating rates of galvanizing, die - casting, and zinc oxide have all increased slightly. In November 2025, the net export volume of galvanized strip was 1,188,531 tons, a year - on - year increase of 13.60%, and the cumulative net export from January to November was 12,932,351 tons, a year - on - year increase of 10.88% [4][5] 3. Summary by Relevant Catalogs Zinc Concentrate - In December, the domestic zinc concentrate TC dropped 550 yuan/ton to 1,500 yuan/ton, and the imported zinc concentrate processing fee index decreased from $61.25/ton to $43.75/ton. The price negotiation for January is still ongoing, and it is expected to decline slightly [2] - In November 2025, the domestic zinc concentrate output was 311,400 metal tons, a month - on - month decrease of 19,400 metal tons and a year - on - year increase of 5.24%, 12,000 tons less than expected. It is expected that the output in December will be 320,000 metal tons. The import volume of zinc ore in November 2025 was 519,019 tons, a year - on - year increase of 13.8%, and the cumulative import from January to November was 4,867,942 tons, a year - on - year increase of 33.7% [2] - As of the end of December, the total inventory of the seven major ports in China was 329,000 tons, a month - on - month increase of 27,000 tons. The raw material inventory of smelters was 388,000 metal tons, a month - on - month increase of 11,000 tons, and the available days increased by 1.5 days to 22.3 days, but the available days of inventory are still low [2] Refined Zinc - According to SMM data, in December 2025, China's zinc ingot production was 552,000 tons, a month - on - month decrease of 43,000 tons and a year - on - year increase of 6.85%. It is expected that the production in January will be 569,000 tons, but the actual output may be lower than expected [3] - Due to the opening of the export window, in November 2025, China's net export of zinc ingots was 24,500 tons, and the cumulative net import from January to November was 228,000 tons, a year - on - year decrease of 43%. The zinc ingot export window closed in mid - December, and it is still expected to be in a net export state in December [3] - In terms of smelting profit, both domestic and imported TC have dropped significantly. Although the zinc price is oscillating strongly, the net smelting loss is still - 2,300 yuan/ton, and the comprehensive smelting still faces a loss of about 1,000 yuan/ton [3] - The latest inventory of zinc ingots in seven places is 106,000 tons, with a destocking of 38,000 tons in December. The consumption in the off - season at the end of the year shows resilience. Even after the export window is closed, the inventory still shows a downward trend. The warrant inventory is 42,419 tons, the bonded area inventory is 3,300 tons, and the latest LME inventory is 107,625 tons, with a cumulative inventory increase of more than 50,000 tons in December [3] Consumption End - The operating rate of galvanizing is 57.0%, a month - on - month increase of 0.3%; the operating rate of die - casting is 30.5%, a month - on - month increase of 1.0%; the operating rate of zinc oxide is 42.9%, a month - on - month increase of 0.3% [4] - In November 2025, the net export volume of galvanized strip was 1,188,531 tons, a month - on - month decrease of 8.53% and a year - on - year increase of 13.60%. The cumulative net export from January to November was 12,932,351 tons, a year - on - year increase of 10.88% [5]

Report Industry Investment Rating No information provided in the given content. Core Viewpoints - Overseas mine production is increasing smoothly, with expected growth of 40 - 50 tons in H2 and 5 tons from domestic mines, leading to a global zinc ore surplus of over 20 tons [5]. - Smelting losses have rapidly recovered, and overall smelting profits are expanding, with expected supply growth of around 15% in H2 and 7.4% for the whole year [4][5]. - Consumption was strong in H1, with an expected annual growth rate of 1.2%. However, the consumption intensity is still difficult to match the supply growth rate [4]. - Inventory is at a historical low, with apparent consumption stronger than actual consumption. As zinc alloy inventory increases and supply pressure grows, a negative feedback loop is expected [4][6]. - The strategy is to short and wait for the accumulation of social inventory [8]. Summary Based on Directory Zinc Ore - Overseas mainstream zinc mines are increasing production normally, and the year - on - year growth is expected to accelerate. In Q1, overseas mine production was 114 tons, a year - on - year increase of 5 tons (4.5%). In H2, overseas production is expected to increase by 40 - 50 tons year - on - year [11]. - Domestic zinc mines contribute limited incremental output, with an expected annual increase of only 5 tons [11]. - From January to May, domestic zinc ore production was 139.8 tons, a year - on - year decrease of 5 tons, but the production rate and output are rising. From January to May, imported zinc ore was 220.4 tons, a cumulative year - on - year increase of 52.5% [12]. Refined Zinc - During the off - season, the spot premium is weakening, indicating supply pressure. From January to June, China's refined zinc production was 324 tons, a cumulative year - on - year increase of only 1.9%. In July, the estimated output is 59 tons, with a possible year - on - year growth rate of 20%. The expected annual output for 2025 is 665 tons, a cumulative year - on - year increase of 7.4% [31]. - Smelting losses have been rapidly repaired, and the rise in by - product prices has further expanded smelting profits. The industry - weighted smelting profit can reach 1,300 yuan/ton, increasing smelting enthusiasm [44]. - Zinc ingot inventory is at a low level, but there is a possibility of invisible inventory becoming visible. As supply growth is expected to remain around 15% in H2, a trend of inventory accumulation is expected during the off - season [47]. Downstream Consumption - Exports are driving galvanized consumption. From January to May, China's galvanized strip net exports were 547.4 tons, a cumulative year - on - year increase of 14.7%. Although there may be some consumption overdraft, there is no need to be overly pessimistic about overseas consumption [52]. - Zinc alloy integration is hiding visible inventory. While zinc consumption has shown positive growth, it is still difficult to match the supply growth rate. As consumption weakens during the off - season, a negative feedback loop is expected, and the invisible inventory of zinc alloy will turn into visible inventory [59]. Terminal Consumption - Infrastructure investment is supporting consumption. From January to May, China's fixed - asset investment increased by 3.7% year - on - year, and infrastructure investment increased by 10.4% year - on - year, with power grid investment increasing by 19.8% year - on - year, driving the demand for domestic galvanized towers [7][62]. - The automotive industry has consumption pre - empted. From January to May, China's automobile production increased by 12.7% year - on - year, but the channel inventory increased from 2.26 million to 2.59 million, indicating possible consumption pre - empted [7]. - The photovoltaic sector may see marginal improvement. From January to May, China's photovoltaic installed capacity was 198GW, a year - on - year increase of 1.5 times. Although the current consumption is at its lowest, there is a possibility of marginal repair in the later period [7]. - The home appliance sector has over - consumed. State subsidies in H1 drove home appliance and automobile consumption, but there is an issue of over - consumption [7].