Recovering Chinese steel output is boosting zinc price over short term
On the back of a stronger-than-expected rebound in economic growth in China, research agency Fitch Solutions Macro Research has revised upward its zinc price forecast for the year.
Initially, the agency anticipated a $2 100/t zinc price, but has revised it to $2 200/t, compared with a zinc price of $2 507/t at the end of 2019.
Zinc prices had fallen by 17.3% on average over the first three months of this year, but have since recovered to post new highs for the year, at a current price of about $2 483/t.
The agency expects the price of zinc to gradually drop further every year to $2 000/t by 2024.
Fitch Solutions says a rapid recovery in steel production and, therefore, zinc consumption in China will buoy zinc prices over the remainder of the year and into 2021.
However, sustained market oversupply will drag zinc prices lower in coming years.
Fitch Solutions explains that this structural decline will be driven by sluggish growth in global steel production, as galvanising steel is the primary use of zinc. “We forecast that, after a rebound in 2021, annual steel production growth will steadily slow down in the coming years due to declining capacity increases in China and Europe.
“In China, escalating environmental restrictions on producers and weakening demand growth from the construction sector will cap steel production growth rates, while European producers will cut production in the face of low steel prices.”
The agency adds that, given this weakening backdrop, it forecasts global zinc consumption growth to slow from an average of 2.2% year-on-year over 2010 to 2019 to an average of 1.1% year-on-year growth over 2020 to 2029.
The slowdown in consumption growth will keep the market in surplus over the coming years.
Fitch Solutions maintains a real gross domestic growth forecast of 2.2% this year for China, unless there is a pronounced second wave of Covid-19 with more lockdown measures.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation