MettaInsights: Zinc Commodity Market

Feb 16, 2022

What is Zinc?

Zinc is a chemical element, a low-melting metal of Group 12 of the periodic table, that is essential to life and is one of the most widely used metals. Zinc is of considerable commercial importance. A little more abundant than copper, zinc makes up an average of 65 grams (2.3 ounces) of every ton of Earth’s crust. (1)

The chief zinc mineral is the sulfide sphalerite (zinc blende), which, together with its oxidation products smithsonite and hemimorphite, constitute nearly all of the world’s zinc ore. Native zinc has been reported from Australia, New Zealand, and the United States, and the leading early 21st-century producers of zinc are China, Australia and Peru. (1)

What is Zinc Used For?

Zinc has both – an industrial and biological role.

Most zinc is used to galvanise other metals, such as iron, to prevent rusting. Galvanised steel is used for car bodies, street lamp posts, safety barriers and suspension bridges. Large quantities of zinc are used to produce die-castings, which are important in the automobile, electrical and hardware industries. Zinc is also used in alloys such as brass, nickel silver and aluminium solder. Zinc oxide is widely used in the manufacture of very many products such as paints, rubber, cosmetics, pharmaceuticals, plastics, inks, soaps, batteries, textiles and electrical equipment. Zinc sulfide is used in making luminous paints, fluorescent lights and x-ray screens. (2)

In biology – zinc is essential for all living things, forming the active site in over 20 metallo-enzymes. The average human body contains about 2.5 grams and takes in about 15 milligrams per day. Some foods have above average levels of zinc, including herring, beef, lamb, sunflower seeds and cheese. Zinc can be carcinogenic in excess. (2)

Price Performance in 2021/2022

The price of zinc was about $2750/tonne on January 2021, reaching $3534/tonne at the end of the year, an increase of over 28%. In 2022, after an initial drop to $3477/tonne, a tonne of zinc changed hands at $3750, a price that is close to the 10-year high – $3795/tonne – reached in October 2021. (3, including the chart below)

Looking at the 25-year chart, we can notice that despite its current breakout, zinc still hasn’t reached its all-time-high of ~$4442/tonne. Can this happen in 2022? Read on. (3, chart below)


Despite the recent rally, the price of zinc might not be able to sustain further appreciation in the next months.

The possibility of more breakouts is mainly diminished by market-wide expectations of zinc oversupply in 2022.

According to the International Lead and Zinc Study Group (ILZSG), zinc supplies will likely exceed demand in 2022. (4) This is despite the fact that demand for zinc is expected to increase this year – usage has already increased by 7.5% with most of that coming from Europe, Brazil, China, India Japan, Turkey and the US. (5)

The additional zinc supply coming to the market is caused by both – increased production of the raw material and a higher pace of refinement. According to IndexBox, mining intensity is projected to remain high this year, resulting in a production-to-consumption surplus and price reduction. (6)

It seems that fears of insufficient zinc reserves that surfaced at the beginning of 2021 have been unfounded. Nonetheless, recent concerns about high energy input cost shared by smelters in Europe have managed to sustain the price of zinc at its 14-year-high levels so far. (7)

The biggest unknown that will have a major impact on the price of zinc is the development of the Covid-19 pandemic. Restrictions seem to be easing gradually, but not in an uniform way from a global perspective. Covid-19 could suppress demand for steel, in turn leading to decreased demand for zinc.

The pandemic has also negatively effected global logistics and energy prices. Once zinc could reliably be transported to where it needs to be and energy prices stabilize, the non-ferrous commodity will likely experience depreciation. (7)

Considering the above, we expect the price of zinc to stabilize in 2022 and even retreat from its multi-year high levels.

Here is a price trajectory prediction by TradingEconomics (3):

The Mettаlex DEX

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1) Encyclopedia Britannica Online. Zinc. Accessed on: 10.02.2022. URL.
2) Royal Society of Chemistry. Periodic Table – Zinc. Accessed on: 10.02.2022. URL.
3) Trading Economics Website. Zinc. Accessed on: 10.02.2022. URL.
4) Varghese, Arpan et al. Global lead, zinc markets to be in surplus in 2022- ILZSG. Published on: 12.11.2021 6:08 AM EDT. Accessed on: 15.02.2022. URL.
5) Büchner, Dr. Heinz-Jürgen. Short Term Commodity Outlook: Aluminum & Zinc. Monthly Report – January. Published on: 18.01.2022. Accessed on: 15.02.2022. URL.
6) IndexBox, Inc. Global Zinc Market 2022: Prices to Drop 4% Due to Oversupply. Published on: 08.02.2022 06:21 ET. Accessed on: 15.02.2022. URL.
7) Barrera, Priscila. Zinc Outlook 2022: Analysts Expect Small Refined Deficit. Published on: 17.01.2022 01:50 PM PST. Accessed on: 15.02.2022. URL.


Check out the rest of the MettaInsights research articles to educate yourself on commodity markets such as Nickel, Palladium, Coal, European Union Emission Allowances (EUAs), Wheat, Uranium, Brent Crude Oil, Natural Gas, Lithium Carbonate, Iron Ore.


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