Rising domestic prices may boost China's imports of refined zinc, which is used to protect steel in products ranging from car bodies to power pylons.
"Supply is tightening. Customers started buying more zinc from Tuesday," said a merchant in Shanghai, China's metals retailing base.
The Guangdong provincial government is scrambling to protect its water supply from a toxic cadmium spill from the Shaoguan smelter.
Shenzhen Zhongjin Lingnan Nonfemet Co Ltd temporarily closed its sole smelter on December 21 and the company has not said when production would resume at the smelter.
The 240,000-tonne-a-year Shaoguan smelter normally produces 160,000 to 170,000 tonnes of zinc and 70,000 to 80,000 tonnes of lead a year.
In Shanghai, prices of spot zinc have risen 7 percent this week to around 17,000 yuan ($2,107) a tonne, from about 15,900 yuan last Friday.
The price was likely to rise a further 6 percent to 18,000 yuan a tonne in January as speculators and consumers see the closure extending another month, traders said.
The closure has also helped support world zinc prices, which hit $1,899 a tonne on Wednesday for the three-months contract of the London Metal Exchange, the highest since March 1989.
"The closure will be at least for one month. Some people see two months," said an analyst for the state-owned research group, Antaike.
Supply has also been cut from smelters in the south-western province of Yunnan, which relies on hydro electricity.
Most small zinc smelters with a total yearly capacity of around 100,000 tonnes in Yunnan have reduced or completely halted production as power stations cut output in the winter, according to the analyst. Once one of the world's major suppliers, China has become an importer of refined zinc because of strong demand at home.
Its net imports of refined zinc jumped to 249,466 tonnes in the first 11 months of 2005 from 15,286 tonnes for the full year of 2004.
Antaike expects China's yearly refined zinc production to rise 3.5 percent to 2.63 million tonnes in 2005 and to increase 4.5 percent to 2.75 million tonnes in 2006.
Zinc output rose 10.2 percent to 2.54 million tonnes last year and increased 1.8 percent to 2.41 million tonnes in the first 11 months of 2005, according to the National Bureau of Statistics.