In 2025, the zinc oxide market in China experienced a generally weak performance, with prices fluctuating downward throughout the year. A combination of declining upstream zinc prices, sluggish end-user demand, rising inventories, and cooling macroeconomic expectations led to a downward shift in the overall price center and a narrower trading range compared with previous years.

From a price perspective, zinc prices followed a pattern of “high opening, gradual decline, bottoming out in September, and divergence between domestic and overseas markets toward year-end.” At the beginning of the year, tight supply at both the mine and smelter levels, low social inventories, and supportive macro sentiment pushed SHFE zinc prices above RMB 26,000/mt, driving zinc oxide prices to annual highs. However, as ore supply continued to ease, cost support weakened and market fundamentals began to deteriorate.

In April, renewed reciprocal tariffs by the United States and China’s countermeasures escalated global trade risks, triggering broad declines across the non-ferrous metals complex. SHFE zinc fell by more than 4% during the month, while LME zinc dropped nearly 10%. Although a temporary tariff truce was reached in May, market confidence recovered slowly amid persistent risk aversion. Meanwhile, China’s refined zinc output increased by nearly 9% year-on-year, while demand from real estate, infrastructure, and other traditional sectors remained weak. The supply-demand imbalance became increasingly evident, spot premiums turned into discounts, inventories accumulated, and prices came under sustained pressure.

Zinc oxide prices reached their annual low toward the end of September. Following a 25-basis-point “risk management” rate cut by the U.S. Federal Reserve, market focus shifted back to fundamental supply and demand dynamics. Domestic inventories continued to rise, while overseas inventory trends diverged, and zinc price ratios weakened. Despite some scheduled maintenance at smelters, overall supply remained ample, with additional output expected in the fourth quarter. On the demand side, the traditional “Golden September” peak season failed to materialize, downstream operating rates stayed low, and incremental demand from the new energy sector was insufficient to offset declines in traditional applications.

In terms of annual averages, zinc oxide prices in 2025 averaged approximately RMB 21,743/mt, down 1.3% from 2024. While the annual low was slightly higher than last year’s bottom, the annual high declined notably, resulting in a narrower price fluctuation range and reflecting more cautious market sentiment.

Downstream consumption remained subdued. In the tire sector, domestic demand for semi-steel tires saw limited growth driven by rising new energy vehicle ownership and replacement demand, while exports continued to face trade frictions and competition from overseas capacity. Exports of all-steel tires declined amid a weak global economic environment. High inventories, intensified price competition, and compressed margins weighed on producers’ willingness to maintain high operating rates.
Demand from ceramics and coatings remained under pressure due to the prolonged downturn in the real estate sector, while feed-grade zinc oxide consumption stayed relatively stable but accounted for a small share of total demand.

On the supply side, China’s zinc oxide output in 2025 is estimated at approximately 769,200 tons, slightly lower year-on-year. The industry’s average operating rate stood at around 55%, significantly lower than historical levels, as producers adopted cautious production strategies to manage inventories and margins. No major capacity expansion plans have been announced in the short term.

In terms of trade flows, China remained a net exporter of zinc oxide in 2025, with exports mainly destined for Southeast and East Asia. Import volumes stayed limited, highlighting the competitiveness of Chinese zinc oxide products in regional markets.

Looking ahead to 2026, domestic zinc oxide capacity is expected to remain stable, with limited new supply additions. Traditional demand from tires, rubber, and ceramics may continue to face challenges, while new energy applications could emerge as a growth driver under supportive policies. However, growth from emerging sectors is unlikely to fully offset weakness in traditional markets in the short term. Overall, the zinc oxide market is expected to remain range-bound, shaped by ongoing supply-demand adjustments.