Zinc Trading Overview: Uses, Markets, and Pricing

Global zinc production exceeds 13 million tonnes annually, with China producing roughly 33% of the total. Australia, Peru, India, and the US are other significant producers. Zinc's primary use is galvanizing steel (approximately 50% of consumption) — coating steel with zinc to prevent corrosion. Other uses include zinc alloys (die casting), brass (copper-zinc alloy), chemicals, and batteries.

Zinc demand is closely tied to construction and infrastructure activity, since galvanized steel is used extensively in buildings, bridges, and automotive applications. The green infrastructure trend (solar panel mounting structures, transmission towers) is supporting zinc demand growth.

The LME zinc contract is the global benchmark, with the metal traded as Special High Grade (SHG) zinc — minimum 99.995% purity. Physical zinc trades at the LME price plus regional premiums. Zinc concentrate (from mines) is priced using treatment charges (TC) similar to copper concentrate.

Major zinc concentrate trade flows move from Australian and Peruvian mines to smelters in China, South Korea, and India. Refined zinc metal flows from smelters to galvanizing plants and fabricators worldwide. LME warehouse stocks and the LME zinc forward curve are key indicators of market tightness.

Zinc is mined primarily as zinc sulfide ore, often alongside lead and silver. Major mines include Red Dog (Alaska), Century (Australia), and several operations in Peru's central highlands. Concentrate is shipped to smelters for processing into refined zinc metal through either the roast-leach-electrowin (RLE) or Imperial Smelting process.

The zinc supply chain has experienced periodic tightness due to mine closures and smelter curtailments (high energy costs). The concentrate market balance — reflected in TC/RC benchmarks — determines whether miners or smelters have pricing power. Zinc recycling from galvanized steel scrap is an increasingly important secondary supply source.