World zinc supplies are headed for a 600,000 tonne surplus in 2008 and a 500,000 tonne surplus in 2009, according to a UBS report released on Monday.

Changes to Chinese taxes on zinc may prompt significant exports and subsequent price pressure in the short term, the report says.

"There’s a rumoured change in Chinese export taxes in 2008 for zinc," Wilson HTM analyst Andrew Pedler says of the report's findings.

"The market participants are wary there may be the removal of a five per cent export tax rebate on super high grade refined material and the levelling of a tax on exports, such that exports might surge up to about 100,000 tonnes from China prior to the changes to these taxes."

A five to 10 per cent tax has been mooted to replace the current five per cent tax rebate.

Global mine supply growth is expected to be in excess of 10 per cent in 2007-08, and new mine projects are set to add up to 1.2 million tonnes of new production, all contributing to the continued weak performance of zinc.

UBS has said it sees zinc averaging around $3,300 a tonne in 2008, a far cry from $4,400 a tonne returns at the end of 2006.