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Small volumes of Chinese zinc ingot have recently been heard moving to Southeast Asia, but sources said the tonnage was minimal and appeared to be trial shipments rather than the start of stable, large-scale export flows.
China is typically a self-sufficient refined zinc market, with trade flows usually limited to imports when import arbitrage opportunities open, while zinc ingot exports remain relatively rare.
But a widening gap between London Metal Exchange and Shanghai Futures Exchange zinc prices has prompted market participants to once again eye potential export opportunities, after a brief export window opened between October and December last year.
The LME three-month zinc contract has climbed since the start of 2026, closing at $3,600 per tonne on Monday June 22, up 12.21% from $3,208 per tonne on January 5.
By comparison, the most-traded SHFE zinc futures contract rose by only 3.99% over a similar period, closing at 24,770 yuan ($3,659) per tonne on June 22, compared with 23,820 yuan per tonne on January 5.
However, the widening price gap has yet to translate into broad export flows, with LME-registered warehouses’ delivery economics remaining short of breakeven, and high premiums for Chinese units in the Southeast Asia spot market not expected to be widely achievable.
“The market has been watching this for several months, but it is still not something everyone can do,” a second zinc trader said. “The question is still whether you can sell the cargo at the right premium.”
Large trading houses are still seen as the most likely participants in Chinese zinc export flows under current export arbitrage conditions, sources said, due to their overseas customer networks, warehouse relationships, logistics capacity and lower financing costs.
Smaller traders and some smelters remain cautious because the trade remains operationally complicated and margins are still narrow.
“Internal procedures, logistics and sales channels all need to be considered,” one market participant said. “It is not something people will do just because there is a small profit on paper.”
Some large traders have already positioned for a potential export window by buying Chinese spot units since late last year, Fastmarkets understood from several sources.
“Some large trading houses have been gradually collecting material from the Chinese spot market since the end of last year. As far as I know, the volume is around 30,000 tonnes,” the second zinc trader said. “But this material has not been exported yet.”
Direct sales into Southeast Asia are currently seen as more viable than delivering zinc into LME-registered warehouses under current arbitrage conditions.
Most market participants estimated that Chinese zinc ingot would need to fetch a premium of about $130 per tonne on a CIF Southeast Asia basis to make exports profitable, though several sources said such levels would be difficult to achieve.
Chinese brands exported to Southeast Asia last year were mostly sold at premiums of around $100-110 per tonne, Fastmarkets understood from several sources.
Subdued regional demand may also limit the scope for higher premiums, with most Chinese zinc exports this year still expected to achieve premiums of only around $100 per tonne CIF Southeast Asia.
“And even at that premium level, I expect transactions would be very small, possibly only a few dozen to a few hundred tonnes,” a Singapore-based zinc trader said.
Higher premiums are likely to be available only to sellers with direct downstream customer networks, stronger brand acceptance and cargoes that match specific buyer requirements, Fastmarkets understood.
Fastmarkets’ assessed the zinc SHG min 99.995% ingot premium, cif Southeast Asia at $110-140 per tonne on Tuesday June 9, narrowing from $110-145 per tonne on Tuesday January 6.
Outside the Southeast Asian spot market, the most likely LME-registered warehouse destinations for Chinese zinc ingot this year remain Singapore, Kaohsiung and Hong Kong, sources said.
But under current export arbitrage conditions, LME delivery remains less workable than direct sales into Southeast Asia, with Chinese zinc ingot deliveries into LME-registered warehouses still estimated to be several tens of dollars to around $100 per tonne short of breakeven.
Singapore is viewed as the most viable LME delivery point, supported by its larger warehouse capacity compared with Hong Kong and Kaohsiung, despite Hong Kong’s shorter distance from some Chinese ports.
“The Hong Kong warehouses have been talking about expanding capacity for a long time, but so far I have not heard of any meaningful increase,” a London-based zinc source said. “Hong Kong zinc stocks have stayed around 8,000 tonnes and have not been able to build up for a long time.”
LME-registered warehouse incentives in Singapore could also help some sellers offset part of the export cost, sources said.
“Freight from Guangxi in China to Singapore is around $30 per tonne, and the incentive offered in Singapore can basically cover the freight,” a Hangzhou-based zinc trader said. “So for some traders, when they calculate export margins to Singapore, they exclude freight directly.”
Although Chinese zinc exports have not emerged at scale, several market participants said execution could be smoother this year if margins improve further.
Last year’s zinc export flows were more ad hoc, and after the previous year’s export attempts, large traders and some smelters are now more familiar with the process. Chinese sellers may also be better prepared in terms of LME-compliant molds, stamping and related documentation.
Some Chinese smelters this year have even prepared certain cargoes specifically for potential LME delivery after 2025’s brief export window.
“I heard some Chinese smelters, after the export activity late last year, have produced some material directly using molds that meet LME requirements, making it easier for delivery,” the trader said. “Last year, many people were preparing at the last minute.”
Logistics could also be less of a hurdle in 2026. The export window late last year coincided with an opening in the copper export arbitrage, tightening vessel availability and making it harder for some traders to book space, Fastmarkets understood.
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