Zinc prices show a strong trend in 2024
According to the Commodity Market Analysis System of Shengyi Society, in 2024, zinc prices showed a step up trend, with an overall increase of 19.48% in zinc prices. The average zinc price in 2024 was 21660.93 yuan/ton, and the center of gravity of zinc prices in 2024 has significantly shifted upward compared to 2023.
Unlike the low volatility of zinc prices in 2023, zinc prices in 2024 have shown a strong trend under the dual effects of macroeconomic favorable conditions and supply-demand mismatch.
Review of Zinc Market Trends
first quarter
In the early stage, due to macroeconomic pressure, the expectation of the Federal Reserve cutting interest rates continued to be postponed, and market sentiment tended to be pessimistic. Domestic zinc ore supply remains tight, and domestic and foreign processing fees have been successively reduced. After the Spring Festival, downstream consumption gradually rebounded, leading to a low rebound in zinc prices in late February. In March, a domestic lead-zinc mine ceased production, and foreign smelting capacity was also reduced, causing frequent market disturbances and driving zinc prices to continue to rise.
The European Central Bank has raised interest rates for the tenth consecutive meeting in response to inflation, raising the deposit rate from 3.75% to 4%, setting a historic high. The economy is weak, and the zinc market is bearish.
Second quarter
Foreign economic data shows positive trends, and a series of favorable policies have been introduced domestically, leading to increased expectations for market recovery. The tight supply of minerals continues, coupled with frequent maintenance of domestic smelters leading to a decrease in production, providing support for zinc prices due to weak supply side. Although the expectation of interest rate cuts has been postponed and the sentiment in the non-ferrous metal market has weakened, zinc prices have achieved the main increase of the year under the cumulative effect of multiple positive factors in the early stage.
Third quarter
From July to August, both the supply and demand sides showed weakness, and coupled with the economic data of the United States and China not meeting expectations, zinc prices showed a range oscillation pattern. In September, the Federal Reserve unexpectedly implemented a rate cut policy, and actively implemented domestic monetary and fiscal policies. Fundamentally, the tight supply of raw materials at the mining end and the decline in processing fees have triggered domestic smelters to reduce production, resulting in a sustained upward trend in zinc prices
Fourth quarter.
With the dust settled on the US election results, the strong US dollar limited the rebound space of zinc prices, and zinc prices gradually returned to fundamental dominance. Although the supply contradiction was not resolved at the end of the year, the market speculation hotspots had subsided, and coupled with weak demand in the off-season, zinc prices showed a range consolidation trend.
2024 Zinc Ore Status and 2025 Expectations
In 2024, global zinc concentrate production is expected to be approximately 12.11 million tons, a decrease of 1.5% year-on-year, or approximately 200000 tons, marking the third consecutive year of year-on-year decline in global zinc ore production.
Production resumption and increase project
In 2024, the tight supply situation in the zinc ore market will only slightly ease, mainly constrained by multiple factors such as declining ore grades, extreme weather, reduced capital expenditures of mining enterprises, and the continuation of suspended projects. Despite the expectation of resuming production and increasing output, as well as the future large-scale production of zinc mines, the actual import volume of zinc mines in China is still limited during the year. Looking ahead to 2025, the supply of zinc ore is expected to become more relaxed, with projects such as Huoshaoyun Lead Zinc Mine, Hunan Naonaopo Lead Zinc Mine, and Lanping Lead Zinc Mine expected to become the main sources of incremental production, with an estimated capacity increase of about 120000 tons. However, attention should be paid to factors such as safety and environmental protection requirements, ore quality, and mining progress that may lead to actual incremental adjustments, with an estimated actual increase of about 100000 tons.
In addition, it is also necessary to pay attention to factors that affect the actual production of the mining end: declining ore grade, extreme weather effects, decreased capital expenditures of mining enterprises, and continued shutdown of projects
Analysis of Refined Zinc Production
2024
The global refined zinc production in 2024 is 13.78 million tons, a year-on-year decrease of 2%.
From January to November 2024, China’s cumulative refined zinc production was 5.675 million tons, a year-on-year decrease of 5.9% or 357000 tons. It is expected that the domestic production will be 6.16 million tons in 2024, a year-on-year decrease of 6.9% or 460000 tons.
2025
The global refined zinc production is expected to increase slightly by 1.2% year-on-year to 13.94 million tons in 2025. It is expected that the domestic zinc production growth rate will be around 4.3% by 2025, reaching 6.43 million tons.
Zinc demand analysis
Infrastructure and power grid:
Infrastructure and power grid use zinc, which accounts for approximately 33% of zinc demand
According to the data released by the National Bureau of Statistics, from January to October 2024, the national fixed assets investment (excluding farmers) will reach 42322.2 billion yuan, an increase of 3.4% compared with the same period last year. Among them, the total amount of private fixed assets investment was 21277.5 billion yuan, a slight decrease of 0.3% compared with the same period. Within the tertiary industry, infrastructure investment (excluding electricity, heat, gas, and water production and supply industries) increased by 4.3% year-on-year. The investment in water management industry has increased significantly, with a growth rate of up to 37.9%; Investment in the air transportation industry followed closely behind, growing by 19.2%; The investment in railway transportation industry also achieved a growth of 14.5%.
From January to October 2024, the cumulative investment in power grid projects reached 450.2 billion yuan, a year-on-year increase of 20.7%; The planned completion target of State Grid Corporation of China in 2024 may exceed 500 billion yuan, slightly lower than the 520 billion yuan in 2023. Driven by the national policy of building a power system with new energy as the mainstay, the proportion of new energy power generation installed capacity in China has rapidly increased. It is expected that within the next three years, the proportion of distribution end investment in the power grid will exceed 60%. Strengthen the backbone architecture of the power grid and accelerate the development of intelligent distribution networks, thereby continuously promoting the growth of zinc demand in the power industry. In addition, the energy storage field has undoubtedly brought significant growth to the application of zinc in the power industry.
Policy boost, real estate downturn or slowing down:
From January to October 2024, the total construction area of real estate development enterprises’ houses was 7206.6 million square meters, a year-on-year decrease of 12.4%, of which the residential construction area decreased by 12.9%. The newly started and completed areas also decreased by 22.6% and 23.9% respectively, and the residential category also showed a corresponding decline. Despite the impact of real estate data on the production rate of die-casting zinc alloys, the demand for die-casting zinc alloys (especially for car door handle manufacturing) has been boosted by the growth in automobile exports. As a result, the production rate of die-casting zinc alloys remained strong throughout the second half of 2024, reaching its highest point in nearly four years.
Home appliances bring incremental growth to zinc, with an expected slowdown in growth rate by 2025
Home appliances account for 21.5% of zinc consumption
Mainly stimulated by national subsidy policies and the Double Eleven shopping festival, the domestic market not only achieved a significant increase in total volume, but also showed a significant trend of optimizing and upgrading product structure. In terms of exports, in addition to the normal export of seasonal products, some enterprises have planned orders in advance due to the uncertainty of the international trade environment, resulting in a sharp increase in export volume. According to a report released by the National Bureau of Statistics, the national refrigerator production in October 2024 was 8.971 million units, a year-on-year increase of 6.8%; The cumulative production from January to October was 87.276 million units, a year-on-year increase of 8.5%. Looking ahead to 2025, given the expectation of a soft landing in the US economy, the demand for air conditioning exports is expected to decline, but the extent is limited. However, attention should be paid to the red ocean crisis caused by the early overdraft of market demand, and at the same time, the downward trend of the domestic real estate market is expected to slow down, which will relatively reduce its negative impact on the home appliance industry. Overall, it is expected that the demand for household appliances in 2025 will remain basically the same as in 2024, or slightly decrease.
The rapid growth of automobiles (including new energy) continues:
Automobiles account for approximately 18% of zinc consumption
According to data from the China Association of Automobile Manufacturers, in October 2024, China’s automobile production and sales volume were 2.996 million and 3.053 million respectively, with a month on month increase of 7.2% and 8.7%, and a year-on-year increase of 3.6% and 7%, respectively. The cumulative production and sales volume from January to October reached 24.466 million and 24.624 million vehicles, an increase of 1.9% and 2.7% respectively year-on-year. The production growth rate slightly decreased by 0.01 percentage points, while the sales growth rate expanded by 0.36 percentage points.
The rapid growth of the automotive industry has strongly promoted the recovery of zinc oxide production rate. Although automotive sheet is an important application area of galvanized sheet, its market demand is affected by the healthy growth of automobile production and sales. However, due to the weight disadvantage of galvanized sheet, it is mostly used in traditional mid to high end fuel vehicles. Therefore, the current automobile production and sales data has limited boosting effect on the galvanized sheet industry. Looking ahead, with the continuous expansion of the proportion of new energy vehicle production and sales, the market demand for galvanized automotive sheet may gradually decrease.
Market forecast for 2025
In 2024, the tight supply situation in the zinc ore market will only slightly ease, mainly constrained by multiple factors such as declining ore grades, extreme weather events, reduced capital expenditures by mining companies, and continued production shutdowns. Despite the resumption of production and the launch of new large-scale zinc ore projects, the actual import volume of zinc ore in China was still limited during the year. It is expected that the supply of zinc ore will gradually ease from 2025 onwards. Looking ahead to 2025, with the improvement of supply conditions in the mining sector and the resumption of production in overseas mines, processing fees are expected to stabilize and rebound, boosting the production enthusiasm of domestic smelters. Given the conduction time, the domestic refined zinc production is expected to be approximately 6.45 million tons by 2025.
According to the latest customs data, the cumulative import volume of refined zinc from January to October 2024 increased by 23.43% year-on-year to 377600 tons. The import volume is expected to remain high in the fourth quarter, and the annual import volume may exceed 450000 tons. In 2025, the refined zinc production of domestic smelters is expected to significantly increase, thanks to the release of smelting capacity and improvement in raw material supply, which will alleviate the supply pressure in the domestic market and may suppress the import of zinc ingots. It is expected that the import volume will slightly decline. The global zinc ingot surplus is expected to be 180000 tons, including 100000 tons in China and 80000 tons overseas.
The outlook for the zinc consumption market in 2025 is optimistic, and zinc prices may continue the trend of high prices in the first half of the year and falling in the second half.
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