Expert zinc market insights
Our quarterly zinc outlook is published in our Quarterly Metals Report, which covers base, precious and ferrous metals. The impact of supply and demand fundamentals and macroeconomic implications for the zinc futures and spot prices are analysed. Our research team produce a zinc price range forecast as part of the report.
Zinc Outlook – Q2 2023
While most of the idled capacity out of Europe is still absent, zinc prices continued to decline, falling more sharply than the declines that we have seen in natural gas prices. Demand for concentrate is expected to improve, resulting in a slight drawdown of concentrate stock. However, the decline is set to be marginal, given the increase in imported concentrate. Zinc to lead ratio has declined sharply, and we expect the demand story, especially in the galvanised steel and auto segment, to keep the ratio at lower levels. This should also weigh on zinc prices more in Q2 2023. Range: $2,300-3,000/t.
The rally we saw in the first weeks of 2023 has stalled, and sentiment deteriorated since, especially in early May. Strong momentum out of China is absent, but recovery out of the region is underway, with services continuing to outperform. Downstream activity improved amid traditional peak season, but buyers have mostly purchased on the dip as needed. The demand outlook continues to struggle, with end-users showing continued softness in the goods’ sales. While this should lead to further easing in the supply chain issues we have witnessed in the last couple of years, looming recessionary fears are weighing on our demand outlook. With the key central banks ending their monetary policy tightening cycle, the focus is poised to shift away from inflation-centric data to fundamentals, such as economic growth and consumer performance. The historically weaker dollar should provide robust support for metals, but with the lack of a strong incentive, we struggle to see base metals significantly higher in Q2 2023.
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