China is expected to post its first ever annual decline in zinc concentrate output this year, as miners produced 4.22% less at 4.8 million mt on the back of weak domestic prices, stringent environmental requirements and ore degradation, China Nonferrous Metals Industry Association said late Wednesday.

In a report reviewing the country's nonferrous industry performance, CNIA said the drop in domestic production would be offset by zinc concentrate imports, which is estimated to reach 3.2 million mt in 2015.

Chinese smelters have been able to maintain operating rates at a relatively high level so far this year, with large producers running at an average 86.55% and mid-tier ones at 73.92%.

China is expected to see the addition of 590,000 mt/year of new smelting capacity over 2015-2016.

In the first nine months of this year, the country already saw the startup of 290,000 mt/year of new capacity, and the remaining 300,000 mt/year capacity is likely to be ready for commissioning next year.

Inventory of zinc ingot in the Shanghai, Tianjin and Guangdong districts has reached 365,200 mt by year end, a 83% jump year on year.

Looking into 2016, CNIA has cited that continuing excess in existing and incremental zinc production capacity, slowing Chinese economic growth and closure of inefficient steel producers would suppress zinc prices further.

However, concerted efforts of leading Chinese zinc smelters to cut production, the drop in treatment charges of zinc concentrate to $160-170/mt recently -- from around $190/mt in November -- and suggestions within the industry of establishing commercial stockpile might help support domestic prices, which CNIA tipped to be rangebound within Yuan 10,000-15,000 ($1,544-2,316)/mt.