Zinc prices are forecast to drop this year to $2,250/mt from $2,450/mt due to a slowdown caused by COVID-19 outbreak, according to Fitch Solutions, as reported by mining.com. Various factories in China halted operations to help fight coronavirus which led to weak demand and increased inventory.
Zinc prices in January peaked at $2,454/mt following the trade pact between the US and China but later, in February prices have fallen to their lowest at $2,000/mt on the London Metal Exchange (LME). Fitch anticipates the prices to remain under pressure in the near term as nations limit their industrial and construction activities to minimise the impact of the virus.
Also, the agency believes if zinc smelters in China ramp up production in the second half of 2020, zinc production will grow by 2.8pc from 2.4pc in 2019, which could narrow zinc supply deficit.
Global zinc consumption growth is likely to slow down to an average 1.1pc over 2020 to 2029 from a growth rate of 2.2pc.
In the long term, prices are likely to trend down as the production balance shifts into surplus on the back of slowing demand growth from the steel sector.