CRU attended the Antaike Lead and Zinc Conference in Dongguan, Guangdong, from 2–5 November 2026. During the event, we took the opportunity to discuss the markets at length with participants from a wide range of sectors, including mining, smelting, downstream manufacturing, trading and logistics.
Our Key Takeaways on Zinc:
2027 zinc benchmark TC expected to reach new record lows
While views differ on zinc mine and refined zinc supply in 2027, most market participants agree that zinc concentrate will remain tight, since smelting capacity has expanded rapidly in 2025–2026 and will grow further in 2027, ahead of mine supply growth. This combination is expected to keep smelter utilisation rates both in China and outside China at very low levels by historical standards.
Because of this, fierce smelter competition for concentrate is expected to drive benchmark treatment charges (TCs) even lower in 2027 compared to the past couple of years, with the range being discussed at US$0–60/t. We expect the new benchmark level is likely to be closer to the bottom of this range, putting more pressure on higher-cost zinc smelters in the ex. China region.
Chinese zinc smelters favour spot-linked annual contracts
The market widely expects global zinc concentrate supply to remain tight in 2027. With current import spot TCs staying at historically low levels, buyers and sellers are finding it difficult to agree on a fixed-TC for their 2027 annual contracts. Therefore, several major Chinese smelters favour annual supply contracts linked to spot TCs, which protect them from being locked into a fixed rate if spot charges recover in 2027. In our view, this remains essentially a spot transaction rather than a genuine annual contract.
By-products now call the tune on zinc and lead TCs
Despite zinc and lead TCs continuing to fall throughout 2026, smelters have seen a marked rise in by-product revenue, including sulphuric acid, gold, silver, copper, indium, germanium, etc. This has largely offset the revenue lost, caused by lower TCs, allowing smelters to keep production relatively stable even with spot TCs being deep in negative territory. However, in recent months, these by-product prices have retreated from earlier highs, losses at smelters have widened gradually, and the risk of output cuts among Chinese lead and zinc smelters has continued to build.
With zinc and lead TCs already at record lows, Chinese smelters are extremely exposed to even the slightest movements in by-product prices, which are now not merely a key influence on where spot and contractual TCs go next, but the key risk to smelter production. This exposure reflects a severe imbalance in bargaining power – smelting capacity has outstripped mine supply, forcing smelters to compete for concentrate and rely on by-product revenue to offset what TCs no longer cover. The pressure will fall first on single-product smelters with limited by-product recovery, whereas integrated copper-lead-zinc smelters have some advantage. Output has therefore diverged markedly, with some smelters cutting production on losses while others hold steady or even raise it.
China’s refined zinc surplus to widen in 2027, driving higher refined zinc exports
Chinese zinc mine output in 2026 is lower than expected, owing to greater disruption from accidents, flooding and stricter regulation. Nevertheless, output is expected to rise slightly by 1–2% y/y in 2027 as a few mines ramp up, including Huoshaoyun, Zhugongtang, Jinhui and Lanping. Combined with zinc smelter capacity additions in China and mine output growth (both domestically and outside China), this is expected to support a 2–3% y/y rise in Chinese refined zinc output in 2027, or 150,000–200,000 t. However, there is a high risk of smelter production cuts in 2027 Q1, in line with the seasonal fall in Chinese zinc mine production.
During the Antaike Lead and Zinc Conference, few market participants held a promising view of Chinese zinc demand in 2027, with demand expected to be broadly flat. Together, these factors are expected to widen the refined zinc surplus in the Chinese market next year and push more refined zinc onto export markets.
China’s refined zinc export push and its downstream limits
With Chinese refined zinc exports increasing sharply in 2026 Q3, China is well on track to become a net exporter of zinc ingot in 2026 on a total annual basis, in line with our forecast. Over the past year, Chinese zinc smelters and traders have been actively developing export markets for zinc ingot and zinc alloys. However, what they found is that delivering into LME warehouses is relatively straightforward, whereas breaking into downstream consumer markets is much harder, largely because zinc ingot consumption in Southeast Asia is limited. In addition, most galvanisers typically require a consistent brand, which has made it more difficult to win over local consumers.
Local galvanisers now prefer refined zinc from Japan, South Korea and Australia, which are generally regarded as more reliable in both supply and quality. Chinese refined zinc has struggled to maintain a steady, continuous supply in Southeast Asia, given how unpredictably the export window opens, and the brands on offer being inconsistent. It will therefore take some time for Chinese refined zinc to be accepted by downstream consumers in Southeast Asia.
AI drives smarter, greener, more competitive mining and smelting in China
Artificial Intelligence (AI) was repeatedly cited at the Antaike Lead and Zinc Conference as a key enabler for mining and smelting. Across China, a few major mining and smelting companies are now drawing on AI to drive smarter, greener operations, thereby raising production efficiency and cutting operating costs, while moving up the value chain to enhance the added value of their products and strengthen their competitiveness. This is a trend to watch, but so far we cannot fully assess whether it will introduce material changes to our view of the mining or smelting supply in China over the forecast horizon.
Our Key Takeaways on Lead:
Lead scrap supply looser in the near term, but structurally tight
While secondary lead production has fallen, participants suggested scrap was available. However, contacts did note that certain materials had limited availability. Tightness has been confined to compliant, invoiced material, with strict reverse invoicing enforcement, initially expected to last until at least end-2026. Capacity in Anhui, Guangxi and Inner Mongolia has been idle or closed, while scrap has flowed to Jiangxi, Jiangsu, Hebei and Henan. Lower secondary lead production has reduced demand for battery scrap, making available supply feel less tight to participants.
However, structural tightness persists – scrap generation is growing slowly while smelting capacity keeps expanding. Most planned capacity is unlikely to start on schedule, leaving the sector in continued consolidation.
Battery exports still outweigh lead imports, but the gap is narrowing
China's net exports of lead-acid batteries contained an estimated 510 kt of lead in January–September 2026, assuming lead made up 60% of battery weight. This compared with net imports of 361 kt of refined lead, bullion and alloy. The implied net outflow of about 150 kt is down from around 450 kt a year earlier, as imports rose more than four-fold while battery exports were little changed.
Some participants argue that persistent battery net exports will erode the scrap pool. However, the net outflow is not new – about 555 kt was embodied in exported batteries in 2024 and 2025 but it has narrowed this year. This gap is not sustainable in the long term and needs to be bridged by lead concentrate imports, domestic production and scrap collection. China’s domestic mine supply is forecast to rise modestly and net concentrate imports remain broadly flat. This points to an increasing reliance on domestic battery scrap for future lead supply.
LME and SHFE destocking extends, imports to persist in the near term
LME and SHFE lead stocks continued to fall, down about 150 kt between early September and 6 November, with SHFE stocks down more than 80% to 13 kt. The sustained drawdown points to tight spot availability, and the peak season for downstream buying is now expected to extend through November. Battery makers remain relatively optimistic, as their finished stocks are still low.
Participants expect imports to keep flowing into China while the import arbitrage stays open and processing remains profitable.
Lead-acid end use narrows but still holds
Lead-acid's end uses are facing significant challenges and this is unlikely to disappear. Vehicle starter batteries remain a core application and electric vehicles still need a 12V battery, although lithium alternatives exist. In energy storage, lead-acid is a small niche, comprising less than 1% of China's battery storage, with advantages in user-side, back-up power and black-start applications.
Substitution is most advanced in two-wheelers, yet low-priced e-bikes (under RMB3,000) and three-wheelers still mainly use lead-acid, providing a firm base. Sodium-ion is still at an early-stage and is reportedly costlier, but policy is leaning towards its favour. Widespread replacement would need a fundamental cost and safety breakthrough.
For readers interested in how AI and geopolitics will influence the future of base metals and beyond, CRU’s Zinc and Lead services provide detailed understanding of current and emerging trends, technologies and products.
If you want to hear more about our work, get in touch – we’ll be happy to answer your questions.
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