Zinc Hits 20-Month High on Fears Over Tightening Global Supply
Thursday, Oct 24, 2024 3:46 am ET
1min read Zinc, a vital metal in various industries, has surged to a 20-month high, driven by concerns over tightening global supply. The metal's price has been volatile in recent years, influenced by factors such as China's economic slowdown, energy prices, and mine production. This article explores the key factors contributing to the recent price rally and its implications for the zinc market.
The zinc market has been characterized by a supply-demand imbalance in recent years. China's economic slowdown and property crisis have impacted zinc demand, as the country accounts for around 60% of global metal demand. However, increased energy prices have allowed many European smelters to return to production, exacerbating the supply glut.
Mine production has been relatively flat in recent years, but an expected increase of 3.9% in 2024 is raising concerns about the market's supply-demand dynamics. Zinc producers are implementing strategies to mitigate the impact of increased mine production on prices, such as reigning in supply and optimizing operations. However, the financial viability of zinc smelters may be at risk if price-related cutbacks become necessary.
The energy transition and EV demand are expected to provide a long-term boost for zinc prices. Its use in protective coatings for solar panels, wind turbines, and electric vehicles is anticipated to drive demand growth. However, in the short term, excess supply and lowered demand from key industries are expected to suppress zinc prices, with the World Bank predicting a 4% decline in 2024.
In conclusion, the recent surge in zinc prices reflects market concerns over tightening global supply. While the energy transition and EV demand offer long-term growth prospects, the immediate outlook is clouded by supply-demand imbalances and economic uncertainties. Investors should monitor the evolving dynamics of the zinc market, as both opportunities and challenges lie ahead.
The zinc market has been characterized by a supply-demand imbalance in recent years. China's economic slowdown and property crisis have impacted zinc demand, as the country accounts for around 60% of global metal demand. However, increased energy prices have allowed many European smelters to return to production, exacerbating the supply glut.
Mine production has been relatively flat in recent years, but an expected increase of 3.9% in 2024 is raising concerns about the market's supply-demand dynamics. Zinc producers are implementing strategies to mitigate the impact of increased mine production on prices, such as reigning in supply and optimizing operations. However, the financial viability of zinc smelters may be at risk if price-related cutbacks become necessary.
The energy transition and EV demand are expected to provide a long-term boost for zinc prices. Its use in protective coatings for solar panels, wind turbines, and electric vehicles is anticipated to drive demand growth. However, in the short term, excess supply and lowered demand from key industries are expected to suppress zinc prices, with the World Bank predicting a 4% decline in 2024.
In conclusion, the recent surge in zinc prices reflects market concerns over tightening global supply. While the energy transition and EV demand offer long-term growth prospects, the immediate outlook is clouded by supply-demand imbalances and economic uncertainties. Investors should monitor the evolving dynamics of the zinc market, as both opportunities and challenges lie ahead.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
_b578c23f1747860566557.jpeg)
