Zinc was among the best-performing base metals in 2024.
It experienced a 13 percent gain, rising from US$2,621 per metric ton (MT) to US$2,979 by the end of the year.
Like copper, zinc faced concentrate shortages in 2024. This situation has led to curtailments at Chinese refiners, which have been forced to compete for limited raw material. Large purchases from exchange warehouses have exacerbated the situation, reducing the amount of refined zinc available to the broader market.
What other factors impacted the zinc market last year? Read on to find out.
In the first half of 2024, the zinc market reacted to fallout from Q4 2023 production cuts.
An oversupply situation that drove prices down at the end of 2023 forced operators to curtail output, as high costs made production unsustainable. However, these cuts had little effect, and by the end of the first quarter, aboveground supplies at London Metal Exchange (LME) warehouses had surged to over 270,000 MT.
In Q2, a price run failed to maintain momentum, as the market lacked the fundamentals to sustain its rise.
“Risk-on investor buying led to a sharp rally in zinc prices in April and May, as bullish sentiment on future copper demand related to the energy transition and AI data centres boosted the LME basket of metals,” Helen O’Cleary, zinc market specialist with CRU Group, wrote to the Investing News Network at the time.
Higher zinc prices came alongside speculation of a US Federal Reserve interest rate cut and renewed hope that rule changes for the Chinese housing markets would boost zinc’s fortunes.
A Fed rate cut also didn’t materialize, with the expectation of when it would happen pushed back to July and then September, when the central bank ultimately made a jumbo-sized 50 basis point cut.
As H2 began, the price of zinc was US$2,928.50, slightly off its first-half high of US$3,139.50 set on May 21. The metal continued to decline as July wore, falling to its H2 low of US$2,581.50 on August 7.
The next two months saw zinc experience significant volatility. It reached a peak of US$2,943 on August 27, slipped back to US$2,712 on September 10 and then rebounded to a yearly high of US$3,198 on October 2.
Zinc remained rangebound above US$3,000 for much of Q4. It fell below that mark on November 8, but by November 25 it was once again trading above that level. Zinc ended the year at US$2,978.50 on December 31.
Ultimately, 14 processors agreed to curtailments that would reduce their 2024 ore demand by nearly 1 million MT.
For now, the market remains weak on the demand side. More than half of refined zinc is used in the production of galvanized steel destined for the construction sector, which has been weak in China and Europe.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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