Zinc price for the year was revised upwards to $2,200/mt from $2,100/mt on the back of rapid recovery of Chinese steel production which will boost consumption of zinc for the remaining part of the year and into 2021, revealed Fitch Research, an industry research organisation. However, prices will gradually go down by 2024, the report said.
Zinc prices are hovering around $2,386/mt. It rallied in the beginning of July and touched a nine-month high on Sept 1 at $2,577.5/mt after dipping to almost $1,793/mt on March 25, the lowest level in 2020. Zinc prices on an average fell over 17pc in the first three months of the year.
China will buoy prices of zinc but after 2021, the industry will be in an oversupply situation which will drive prices down as there will also be a slowdown in consumption.
The upward price forecast is, however, for the short term as Fitch expects prices to drop gradually in the coming years and reach $2,000/mt by 2024. Fitch backed this forecast by stating that after a rebound in 2021, annual steel production growth will slow down steadily in the coming years on declining capacity of production in China and Europe.
Fitch has also forecast steel market to be in a surplus of 1.1mn mt in 2020 compared to a deficit of 16.7mn mt in 2019. The surplus is forecast to narrow to 200,000mt by 2021.