Recent easing signals in Middle East geopolitical tensions have drawn renewed attention from energy, shipping, and non-ferrous metals markets. For the zinc market, the impact may not be a simple bullish or bearish story. It is more likely to unfold through short-term sentiment recovery, medium-term cost changes, and longer-term supply-demand adjustment.
According to market discussions cited in the original industry article, improved shipping expectations around the Strait of Hormuz may reduce part of the risk premium in crude oil, marine insurance, and transportation costs. This has helped repair market risk appetite and supported a more constructive mood for dollar-priced base metals.
1. Short-Term Sentiment May Improve as Energy Risk Premium Falls
When crude oil’s geopolitical premium declines, inflation pressure may ease at the margin. This can reduce market concerns over tighter monetary policy and support a weaker dollar environment, which is usually helpful for the valuation of dollar-denominated non-ferrous metals.
For zinc, this means the first layer of influence is sentiment. Funds may move from safe-haven assets back into cyclical commodities, creating short-term support for market confidence.
2. Transportation and Energy Costs May Ease, But Supply Tightness Remains
If shipping through the Strait of Hormuz gradually normalizes, route congestion, fuel costs, and insurance premiums may fall. This could reduce part of the mining, transportation, and smelting-related cost pressure across the zinc supply chain.
However, lower transportation costs do not mean immediate raw material abundance. The original article notes that China imported about 5.31 million physical tonnes of zinc concentrate in 2025, with around 325,000 physical tonnes from the Middle East, accounting for roughly 6%. Even if some cargo flow improves, the effect is more likely to be marginal relief rather than a full reversal of tight concentrate supply.
At the same time, zinc concentrate treatment charges remain under pressure. With imported TC and domestic TC both at low or negative levels, smelters still face tight raw material conditions. Before large-scale smelter production cuts occur, TC may find it difficult to rebound quickly.
3. Sulfuric Acid Revenue Remains Important for Smelter Profitability
Under negative or weak treatment charge conditions, zinc smelters increasingly rely on by-product revenue, especially sulfuric acid and minor metals. This makes sulfuric acid pricing an important factor in smelter profitability.
The Strait of Hormuz is also an important route for overseas sulfur and related energy-chemical trade. If navigation conditions improve, sulfur prices may face short-term sentiment pressure. However, the article points out that high sulfur and sulfuric acid prices are mainly supported by supply-demand mismatch. If sulfuric acid prices remain relatively strong, smelter profits may still receive support, limiting the possibility of sharp zinc output reductions.
4. Demand Shows Mixed Signals
On the demand side, the market may see a two-way split. According to the original article’s calculation based on customs data, galvanized sheet exports from China to Middle Eastern countries accounted for about 15.3% in 2025. If regional tensions ease, export recovery and post-conflict infrastructure rebuilding may create incremental galvanized demand.
At the same time, the domestic market is still in a traditional off-season. Social inventory remains relatively high, and spot transactions are not strong enough to fully support a sustained rally. This means the zinc market may show a divergence between stronger macro sentiment and weaker spot fundamentals.
JH Carbon View
Overall, easing geopolitical risk may support zinc through short-term sentiment repair and medium-term cost improvement. However, it does not fundamentally change the current structure of tight zinc concentrate supply, high domestic inventory, and seasonal demand pressure.
For buyers of metallurgical raw materials, geopolitical changes can influence not only metal prices, but also energy, shipping, sulfur, sulfuric acid, and smelting cost structures. JH Carbon will continue to monitor market changes in carbon, coke, coal, graphite, sulfur-related materials, and other industrial raw materials to support customers with stable supply, procurement coordination, and market information reference.
Q&A
Q1: How does easing geopolitical risk affect the zinc market?
It may improve short-term market sentiment, reduce part of the energy and shipping risk premium, and support cost improvement, but it does not immediately change zinc supply-demand fundamentals.
Q2: Why is the Strait of Hormuz relevant to zinc smelting?
The Strait of Hormuz affects energy, shipping, sulfur, and related chemical raw material flows. These factors can influence mining, transportation, sulfuric acid, and smelting cost structures.
Q3: Does lower transportation cost mean zinc concentrate supply will become loose?
Not necessarily. Improved shipping may bring marginal relief, but tight zinc concentrate supply and weak treatment charges may continue if smelter demand remains strong.
Q4: Why is sulfuric acid important for zinc smelters?
When treatment charges are weak or negative, sulfuric acid and minor metal revenue can become important profit sources for zinc smelters.
Q5: What should raw material buyers watch next?
Buyers should monitor zinc concentrate TC, domestic inventory changes, sulfuric acid prices, energy costs, and shipping conditions.
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NOTE: Market data and industry views are for information reference only and do not constitute investment advice.
