Zinc Prices to Remain Constant Amid Global Supply Surplus

The recent property crisis that unfolded in China during the last quarter has exerted a profound influence on the tumultuous ride of zinc prices in the global market. This tumult was particularly evident as zinc prices experienced a significant descent, plunging from a robust $3,100 per tonne to a less formidable $2,500 per tonne. The London Metal Exchange (LME) spot price for zinc, as of the latest update on Wednesday, stands at $2,601 per tonne. Despite this roller-coaster journey, experts, with a tempered optimism, see the prospect of zinc prices finding stability in the final months of this year.

One source of insight into the future of zinc prices comes from the Australian Office of the Chief Economist (AOCE). Their forecast anticipates an average zinc price of $2,700 per tonne for the entirety of 2023. This projection is intricately linked to the reduction in zinc production that has been witnessed in both Europe and Australia. In contrast to this perspective, the International Lead and Zinc Study Group (ILZSG) has presented data that lays bare a surplus of a staggering 370,000 tonnes in global zinc supply, significantly outpacing the demand during the initial half of 2023.

Examining the various facets of the market further, signals emerge that underscore the complex dynamics at play. ING Think, for instance, has drawn attention to specific indicators that herald a potential upswing in zinc demand. Among these indicators is the conspicuous increase in cancelled warrants at LME warehouses, coupled with a noticeable depletion of inventories on the Shanghai Futures Exchange.

However, amid these varying viewpoints and market signals, BMI Research, a prominent industry voice, maintains a predominantly pessimistic long-term outlook for zinc prices. Their projections extend from the year 2024 through 2027, painting a picture of zinc prices that average around $2,150 per tonne during this period. Adding to this somber outlook, they anticipate a phase characterized by 'weak zinc demand growth.'

The terrain of zinc prices has been marked by its share of peaks and valleys, significantly influenced by the recent property crisis in China and other global factors. While experts hold a range of opinions regarding the future trajectory of zinc prices, the current market conditions appear to suggest a degree of stability for the remainder of 2023. The intricate interplay of variables such as the global supply surplus, production trends, and demand dynamics will persist in shaping the course of the zinc market, ultimately carving its path in the years to come.