After rising over 14 per cent since the beginning of 2024, zinc prices will likely rise modestly on a tight supply outlook and forecast of improved demand. 

“Zinc demand has strengthened in recent months due to improvements in the outlook for global industrial production. After large falls in 2023, the zinc price is forecast to rise modestly over the outlook period, from about $2,700 a tonne in 2024 to about $2,800 a tonne by 2026,” said Australia’s Office of the Chief Economist (AOCE). 

Research agency BMI, a unit of Fitch Solutions, said: “We are revising up our zinc price forecast for 2024 to 2,600/tonne as more robust market fundamentals drive prices higher.”

Stocks recover

It said zinc prices averaged $2,681 a tonne so far in 2024,pushed higher by a tighter supply outlook than previously anticipated. “We now expect a more modest global market surplus, which is set to drop below levels seen in 2023,” the agency said. 

AOCE said prices, however, remain below the 2023 highs (of above $3,400 a tonne), which came about due to market concerns over shortfalls in refining capacity. “After experiencing substantial volatility in 2023 zinc stocks have recovered, averaging around 250,000 tonnes in May 2024,” it said. 

ING Think, the economic and financial analysis wing of Dutch multinational financial services firm ING, said zinc stocks fell by 0.6 per cent week-on-week as of July 12.

Currently, zinc is quoted at around $2,870 a tonne for the third-month contract on the London Metal Exchange. 

World Bank outlook

In April, the World Bank said in its Commodity Outlook that zinc prices are projected to fall by 6 per cent in 2024. “Subdued industrial activity in China and other major economies is envisaged to weigh on demand for zinc, which is mainly used to galvanize steel for construction, manufacturing, and infrastructure,” it said.  

The International Lead and Zinc Study Group (ILZSG), an arm of the UN, said preliminary data showed the global market for refined zinc metal was in surplus by 182,000 tonnes in the first four months of 2024 with total reported inventories increasing by 152,000 tonnes. 

However, mine production fell by 3.2 per cent, influenced by decreases in Canada, South Africa, Türkiye and Peru. Refined metal production rose by a limited 0.1 per cent. The usage of refined zinc metal increased by 2.5 per cent, ILZSG said.

Weaking dollar impact

ING Think said Chinese refined zinc output rose 1.8 per cent month-on-month to 545,800 tonnes in June, while it is expected to fall to 507,000 tonnes in July due to maintenance amid concentrate shortages and regular repairs. This will likely push up prices. 

BMI said a brighter demand outlook is set to continue to bolster investment sentiment. “Additionally, the weakening of the dollar will place a floor under prices later in the year,” it said.

However, the research agency said prices are forecast to settle below the average annual price of 3,440/tonne and 2,651/tonne seen in 2022 and 2023 respectively, continuing on a year-on-year downward trend as excess supply and an uncertain demand outlook temper growth prospects.

AOCE said higher zinc prices should take pressure off mine margins, easing pressure for further price-induced mine closures. 

The World Bank said major zinc producers are likely to reduce supplies this year, with some European smelters set to remain fully or partly idle following closures in 2022 caused by high energy costs. 

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