Zinc prices have fallen below $2,500 per tonne

Zinc Price Decline: Zinc prices have fallen below $2,500 per tonne after reaching a four-month high on September 29th. This decline is attributed to concerns about an oversupply of relative to demand.

Surplus in Zinc Market: The International Lead and Zinc Study Group (ILZSG) reported that the global refined zinc market is expected to have a surplus of 248,000 metric tons in the current year. This is a significant shift from a previously projected deficit of 45,000 tons. The surplus is driven by lower-than-anticipated demand.

Demand Outlook: Global demand for refined zinc is now projected to increase by 1.1% to 13.59 million tons in 2023, which is lower than the April projection of 13.80 million tonnes. This reduction is attributed to tight monetary conditions.

Supporting Factors: Zinc prices are finding some support from hopes for China’s economic recovery, positive PMI data, and reports of additional stimulus measures. Expectations of reduced production from Europe and Australia are also limiting the price decline.

Surpluses in 2023 and 2024: The ILZSG anticipates surpluses in the global refined zinc market for both 2023 and 2024. In 2023, the surplus is expected to be 248,000 tons, and in 2024, it is projected to increase to 367,000 tons.

Production Forecast: Global refined zinc metal production is forecasted to rise by 3.7% to 13.84 million tons in 2023 and by 3.3% to 14.30 million tons in 2024. This increase is mainly driven by a substantial rise in production in China.

LME Stocks: Total London Metal Exchange (LME) zinc stocks have experienced fluctuations. They rose to 99,100 tonnes as of October, up from 30,475 tonnes at the beginning of the year. However, since their peak on August 31st at 153,975 tonnes, global stocks have declined by 35.6% from August to October.

Regional Disparities: There are significant regional disparities in zinc stocks. Levels in Europe and the United States have remained at zero throughout 2023, while stock levels in Singapore were recently at 79,925 tonnes. Despite these disparities, there is no significant shortage of material in Western markets, and premiums have declined throughout the year due to poor demand.