[Edaily Reporter Kim Hyung-il ] Shinhan Investment Securities projected that margin pressure at KoreaZinc(010130), caused by a sharp drop in spot zinc concentrate treatment charges (TC), will continue through the first half of next year, but noted that copper, sulfuric acid, and germanium are expected to fill the gap. The firm maintained its “Buy” rating and target price of 1.6 million won.

On the 16th, Park Gwang-rae, a research analyst at Shinhan Investment Securities, stated, “The global zinc market is in a state of oversupply in the first half of 2026,” adding, “LME prices have risen more than 20% since the beginning of the year, reaching their highest level in about four years since the summer of 2022.” The analysis suggests that, unlike inventories in China, available stocks in LME-designated warehouses have decreased by more than 60% compared to the beginning of the year, leading to a shortage of physical supply. SHFE inventories stand at 156,000 metric tons, while LME inventories are at 98,000 metric tons.

The issue lies with zinc concentrate. As the spot TC for zinc concentrate imported into China has fallen to around -$100 per metric ton, the structure has shifted such that the increase in metal prices is not being reflected in smelting margins. Consequently, profitability pressures on general smelters are expected to persist through the first half of 2027.

Research Fellow Park cited copper, sulfuric acid, and strategic minerals as KoreaZinc’s key differentiators. Regarding copper, 71.7% of exchange inventories are tied up on the New York Mercantile Exchange (COMEX), where tariffs are paid in advance; as a result, available LME inventories stand at 90,000 metric tons—equivalent to just 1.2 days’ worth of global consumption. LME copper prices have risen 51% year-over-year.

Regarding sulfuric acid, the market is facing a shortage of sulfur and sulfuric acid, as Chile’s imports of Chinese products recorded zero metric tons in March. Consequently, while the cost of hydrometallurgical processing has risen, KoreaZinc’s gross profit margin on sulfuric acid reached approximately 10% in the first half of the year—higher than the historical range of 2–3%. Furthermore, regarding strategic minerals, he projected that China’s export licensing system and the U.S. stockpiling initiative, Project Vault, would enhance the value of non-Chinese recovery facilities.

Research Fellow Park analyzed, “Copper, sulfuric acid, and germanium are expected to fill the gap, while U.S. stockpiling and price floors are projected to boost the value of Crucible.” He also cited rising precious metal prices as an additional factor. “If rising precious metal prices are added to the mix, it would be the icing on the cake,” Research Fellow Park assessed.

He viewed the risk related to management control as having passed a critical juncture. At the extraordinary shareholders’ meeting on the 9th, the audit committee members recommended by the board of directors were elected with 81.8% approval, and the board was restructured with a 12-to-7 split.

He identified the timing of a rebound in spot TC and the price of silver as key future variables. Research Fellow Park cited whether spot TC would rebound due to reduced smelting in China as a major variable, and estimated that a $1 per ounce fluctuation in the price of silver would affect annual operating profit by 10 to 12 billion won.