Based on recent industry reports and market data, the zinc market in 2025 is shaped by a complex interplay of supply dynamics, policy shifts, and demand fluctuations. Below is a comprehensive analysis:
Zinc Ore and Smelting:
Global zinc ore supply is expected to ease in 2025, with processing fees (TC) rising significantly. Domestic Chinese processing fees increased to 3,050 CNY/metric ton, while imported ore fees stabilized at 20 USD/dry ton. Smelters are resuming production due to improved profitability from higher sulfuric acid prices and processing fee margins, which may boost monthly output to 550,000 tons.
However, long-term constraints remain, including low global mine production growth (estimated at 4% YoY) and delays in new projects like China’s Huoshaoyun mine, expected to fully operate only by Q3 2025.
Inventory Trends:
Domestic zinc inventories remain low, with SMM-reported stocks at 136,500 tons (March 2025), supporting price stability despite weak demand.
Domestic Policy Stimulus:
China’s "large-scale equipment renewal and consumer goods replacement" policy, effective January 2025, expands subsidies for appliances (e.g., refrigerators, air conditioners) and infrastructure, potentially boosting zinc consumption in manufacturing.
Real estate sector support, including mortgage rate cuts (to 3.3%) and liquidity measures, may stabilize zinc demand in construction.
Export Challenges:
U.S. tariff risks under the Trump administration (e.g., 10–20% tariffs on imports) threaten zinc alloy exports, particularly from Guangdong, a major production hub. Export growth in 2024 (+54.58% YoY) may slow in 2025.
Sectoral Performance:
Galvanizing (55% of zinc use) and die-cast alloys (15%) show moderate recovery, with operating rates at 57.23% and 56.99%, respectively. Automotive and home appliance production growth (e.g., air conditioners +18.02% in 2024) supports demand.
Zinc Price Forecast:
Prices are expected to trend lower in 2025 due to easing ore supply and smelting resumption, with Shanghai Futures Exchange (SHFE) zinc projected at 23,000–24,200 CNY/ton. LME zinc may range between 2,800–3,800 USD/ton.
Macro factors like U.S. interest rate policies, trade tensions, and China’s post-Lunar New Year demand will drive volatility.
Investment Strategies:
Short-term opportunities include spread trades during seasonal demand peaks (Q2 2025), while long-term investors may consider hedging against oversupply risks post-Q2.
Geopolitical tensions (e.g., U.S.-China tariffs) and slower-than-expected policy implementation in China could disrupt demand.
Mine production delays or energy cost spikes may tighten supply unexpectedly.
The 2025 zinc market balances easing supply pressures against policy-driven demand recovery. While domestic stimulus and infrastructure projects offer upside, export headwinds and global macro risks necessitate cautious optimism. Investors should monitor inventory trends, smelting activity, and policy updates closely.