Zinc prices are on the rise as tightening market fundamentals push the commodity higher, with industry analysts lifting their price forecasts for 2024.
BMI – a unit of market analyst Fitch Solutions – has updated its zinc price forecast to $US2700 per tonne (t) for 2024, reflecting a robust market driven by supply constraints and macroeconomic factors.
Zinc prices have risen by 19.2 per cent year-to-date (between January 2 and October 3), reaching an average of $US2734/t, which is a marked increase from to the $US2651/t average in 2023.
BMI cites a 141,000t market deficit forecast for 2024 as the key driver behind this price surge, contrasting sharply with the 196,000t surplus seen in 2023.
The deficit is largely attributed to a contraction in zinc concentrate production, which has hampered refined output and tightened overall supply.
The US Federal Reserve’s recent rate cuts and fresh stimulus measures from mainland China have supported demand. This saw prices reach a year-to-date high of $US3174/t on October 2.
These levels have not been seen since February 2023, underscoring the strength of current market conditions.
While zinc prices are expected to soften slightly in the coming months, they are likely to remain well-supported due to robust supply-side constraints.
On the supply side, year-on-year global zinc mine production is forecast to drop from 13,000t to 12,900t for 2024.
The decline is driven by a series of mine closures, which were prompted by low prices in 2023.
The decline in Chinese zinc treatment also presents a downward shift in production in 2024, with spot treatment charges on imported zinc concentrate falling below zero US dollars per tonne. This highlights a mismatch between zinc smelting capacity and raw material availability, with profit margins squeezed.
Many zinc smelters across mainland China have reduced concentrate demand, delayed expansion plans and increased their use of secondary materials.
This will likely drive tighter supply conditions and push zinc prices up in the months to come.
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