Zinc prices will likely decline in 2025 on a rebound in refined zinc production and weak demand, say analysts. 

“We anticipate that refined zinc production will rebound in 2025, following a contraction in 2024, driven by the easing of ore supply constraints. This is set to push the market into an annual surplus of 270,000 tonnes in 2025, contrasting sharply with the 184,000 tonnes deficit expected in 2024,” said research agency BMI, a unit of Fitch Solutions.

The International Lead and Zinc Supply Group (ILZSG), an arm of the UN, said preliminary data compiled by it show the global market for refined zinc was in surplus by 19,000 tonnes over the first ten months of 2024 with total reported inventories increasing by 80,000 tonnes. 

Price forecast

The World Bank, in its Commodity Outlook, said zinc prices are forecast to fall by 4 per cent in 2025 and 2026 as zinc supply picks up.

However, the Australian Office of the Chief Economist (AOCE) said zinc demand is expected to grow moderately in 2025, following the a sharp decline in 2023. “The anticipated growth will be largely driven by galvanised steel usage in the manufacturing, construction and automotive industry,” it said.  

BMI said zinc price is forecast at $2,650 a tonne in 2025. “Despite starting the year at a robust $2,888/tonne on January 3, 2025, we expect a 5.8 per cent drop in the average annual price year-on-year, effectively erasing 2024 gains,” the research agency said.

In the long term, it forecast prices to average $2,700/tonne over 2024-2028, remaining below 2022 levels of $3,440/tonne.

The AOCE said prices are anticipated to stabilise at $2,770 a tonne in 2025 and $2,710 a tonne in 2026.

US-based Morgan Stanley said prices in 2025 are expected to be little changed from 2024 at about$2,770 a tonne, before dipping slightly to US$2,710 a tonne in 2026. 

Uncertain Chinese economy

Zinc London Metal Exchange (LME) 3-month contract closing price on Tuesday was $2,865.50 a tonne. The metal, often used in die-casting alloys, castings, brass products, sheeting products, chemicals, medicine, paints and batteries, quoted at $2,830.50 for cash on the LME.

BMI said while supply-side factors dominate, broader market headwinds could exert additional pressure on zinc prices. “First, an uncertain Chinese economic growth outlook will continue to present a price-risk in 2025.

Second, (US) President (Donald) Trump’s re-election is expected to inject considerable volatility into the market due to his proposed trade policies,” it said.

Tata Mutual Fund, in its Commodity Communique, said stabilization is expected on the zinc supply front. “However, high energy costs in Europe remain a significant factor, potentially restricting smelting capacities,” it said. 

Mine closures

The Comminique said zinc prices are expected to face pressure from these ongoing challenges, global monetary policies and China’s economic recovery efforts will play a critical role in determining the pace of price gains in 2025. 

The AOCE said stable zinc prices over the outlook period are expected to help reduce the likelihood of further price induced mine closures. 

IZLSG said world zinc mine production fell by 3.8 per cent in the first 10 months of 2024, influenced by decreases in Canada, China, South Africa and Peru, where output at the large Antamina mine declined substantially.  Production in Europe was lower, primarily as a result of reductions in Ireland and Portugal. However, there were rises in Bolivia, Mexico, Sweden and Congo, where Ivanhoe Mines commissioned the Kipushi mine in June.

Construction sector the key

Last year, refined metal production was limited by the availability of concentrates and fell by 1.7 per cent. This was mainly the result of reductions in China, Japan, the Netherlands, Peru and the Russian Federation which were partially offset by rises in France, India and Germany, where the Nordenham smelter resumed production in March. 

Usage of refined zinc increased in Brazil, India, South Korea, Mexico, Taiwan, Thailand, Türkiye and Vietnam were partially offset by reductions in China, Europe and the United States, resulting in an overall global rise of 1.3 per cent. 

BMI said a slowdown in China’s construction sector could dampen global refined zinc demand. The construction industry, which uses galvanised steel for corrosion protection, accounts for approximately 50 per cent of global zinc consumption. 

“Consequently, a decline in construction activity would significantly impact zinc demand. This could substantially affect overall zinc market dynamics, given China’s considerable role in global zinc consumption,” it said.