Downtrend in zinc prices poised to continue this year

File picture: Zinc ingots stacked at the Public Procurement Service warehouse in Gunsan, South Korea
| Photo Credit:
SEONGJOON CHO

Zinc prices will likely continue their downtrend on weak demand that has been exacerbated by US President Donald Trump’s trade policies, experts say.

“Like other base metal prices, sentiment in the zinc market has been impacted by perceptions of insufficient Chinese policy stimulus measures in late 2024 and weak demand in the US and EU,” said the Australian Office of the Chief Economist (AOCE). 

“Weak demand, exacerbated by Trump’s trade policy shifts, is likely to further undermine market fundamentals and exert additional downward pressure on prices,” said research agency BMI, a unit of Fitch Solutions. 

“Soaring prices for steel coils due to the limited domestic capacity limited demand for zinc in galvanisation,” said the Trading Economics website.

Price forecast

BMI said it was maintaining its zinc price forecast for 2025 at an annual average of $2,650/tonne. This is despite the metal, which is used in batteries and for anti-corrosion, averaging $2,848/tonne in the year-to-date as of April 10.

The AOCE said zinc prices are forecast to average around$2,800 a tonne in 2025 before declining to $2,600 a tonne in 2027, due to softer demand. 

On Tuesday, the three-month LME zinc contract ruled at $2,644.50 a tonne. Spot prices are ruling at $2,628 a tonne. Zinc has lost over 11 per cent since the beginning of the year and over 10 per cent month-on-month. 

BMI said prices are set to continue their downtrend, effectively erasing the gains made in 2024. “We anticipate a 5.7 per cent decrease in prices from the 2024 annual average of $2,811/tonne as refined zinc production rebounds, spurred by the alleviation of ore supply constraints,” it said.

Demand side risks

This will likely push the market into an annual surplus of 331,000 tonnes in 2025, contrasting sharply with the 123,000 tonnes deficit estimated in 2024. 

BMI said the escalation of risks associated with Trump’s trade policies is poised to further cast downward pressures on zinc prices. “Despite significant back and forth over the past week, the sweeping 10 per cent tariffs on nearly all global imports, which took effect on April 5, remain in place as of April 10, along with increased rates for China, Mexico, and Canada,” it said. 

Although the newly imposed tariffs exclude most zinc products, they pose significant demand-side risks amid escalating fears of a US-led global recession. “We anticipate volatility ahead as market players respond to the ongoing stream of trade-related developments,” said the research agency.

On the supply side, global refined zinc production is poised for a rebound in 2025, and it will drive prices lower. This anticipated growth follows a period of contraction in refined zinc output, primarily due to constrained zinc concentrate supply. 

Cautiously optimistic

“We estimate that global zinc mine production declined by 0.7 per cent year-on-year to 12,000 tonnes in 2024 from 12,100 tonnes in 2023, largely due to mine closures triggered by the weak price environment in 2023 and early 2024. However, our outlook for 2025 is more optimistic, projecting a 2.9 per cent recovery in global zinc mine production as key operations resume,” said BMI.

The research agency said it was cautiously optimistic about global zinc production growth, projecting a 2.4 per cent increase in 2025. “We have revised down our demand outlook as fears of a global recession mount amid Trump’s tariff turmoil. We now project global refined zinc consumption to decrease by 0.9 per cent (down from our previous forecast of an increase of 1.7 per cent in 2025),” said the research agency.

However, the AOCE said the recent announcement of a production cut at Nystar’s zinc smelter in Australia, coupled with the signs of limited concentrate markets, could check the price fall.

BMI said, “We anticipate that shifts in Trump’s trade policies will pressure zinc demand and highlight the potential for further downward revisions to our demand forecasts in the coming months.”

Published on April 15, 2025