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Economic Times
16 hours ago
- Business
- Economic Times
Zinc and lead in 2025: Global trends, China's role, and price outlook
Global Demand and Supply Live Events China: A Pivotal Player LME Price Performance Correcting U.S. Dollar and Its Impact on Base Metal Prices in 2025 Outlook (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel The global zinc and lead markets in 2025 are navigating a complex landscape shaped by shifting industrial demand, evolving supply chains, and macroeconomic uncertainties. Both metals are essential to the infrastructure, automotive, and energy sectors, making their market dynamics critical to global economic to the International Lead and Zinc Study Group (ILZSG), global demand for refined zinc is projected to rise by 1% in 2025, reaching 13.64 million tonnes. This modest growth follows a decline in 2024, reflecting a cautious recovery in industrial the supply side, zinc mine production is expected to increase by 4.3% to 12.43 million tonnes, driven by new capacity in Australia, China, Mexico, and the Democratic Republic of Congo. Refined zinc output is also set to rise, leading to a forecast surplus of 93,000 lead, global demand is anticipated to grow by 1.5% to 13.19 million tonnes, while mine production is forecast to increase by 2.3% to 4.62 million tonnes. Refined lead output is expected to reach 13.27 million tonnes, resulting in a surplus of 82,000 surpluses suggest a softening of price pressures, although regional dynamics may still cause remains the dominant force in both zinc and lead markets. In 2025, Chinese demand for refined zinc is expected to grow by 0.9%, recovering from a 1.9% decline in 2024. This rebound is supported by government stimulus measures, a recovering property sector, and increased infrastructure lead demand in China is forecast to rise by 0.9%, reflecting stabilization in battery production and the automotive the supply side, China continues to expand its mining and refining capacities. It is a key contributor to the global increase in both zinc and lead production, helping offset declines in other regions. However, environmental regulations and energy constraints may limit further London Metal Exchange (LME) has seen mixed performance for zinc and lead in 2025. Zinc prices have remained relatively stable, buoyed by expectations of demand recovery and constrained supply growth. However, the anticipated surplus has capped significant upward momentum. Lead prices have shown similar trends, with modest gains reflecting balanced metals are influenced by broader macroeconomic factors, including the weakness of the US dollar, interest rate policies, and geopolitical tensions. The inverse relationship with the Dollar Index has been particularly evident, with price movements closely tracking currency U.S. dollar has entered a significant correction phase in 2025, with the Dollar Index falling over 10.8% in the first half of the year—its steepest decline since the a weaker dollar boosts base metal prices, as commodities priced in dollars become cheaper for holders of other currencies. However, the current market response has been more nuanced, indicating that supply-demand fundamentals and macroeconomic factors are exerting a stronger influence than currency movements ahead, the zinc and lead markets in 2025 are characterized by cautious optimism. While global surpluses may temper price spikes, the performance of the US dollar and regional demand—especially from China—will play a crucial role in shaping market dynamics. Investors and industry stakeholders should closely monitor policy shifts, supply chain developments, and macroeconomic indicators to navigate this evolving landscape.
Reuters
28-04-2025
- Business
- Reuters
Investment funds turn bearish on over-supplied lead and zinc
LONDON, April 28 (Reuters) - Fund managers have turned increasingly negative on lead and zinc's price outlook and the latest forecasts from the International Lead and Zinc Study Group will do little to change their minds. Both metals are expected to be in supply surplus this year, a turnaround for zinc but the third consecutive year of over-supply for the lead market. here. The two metals are geological sisters, as they tend to be sourced from the same mines. Right now, they are also bound by weak demand. ILZSG, which has just met for one of its twice-yearly catch-ups, estimates both metals experienced falling usage in 2024 and the group is forecasting only a modest recovery this year. ZINC LOSES ITS SHINE Zinc has under-performed the rest of the London Metal Exchange base metals pack so far this year. After sliding to a one-year low of $2,515.50 per metric ton earlier this month, LME three-month zinc has since recovered to $2,636.00, but is still down by 11% on the start of January. Fund managers have cut long positions and scaled up bearish bets into the recent price weakness. The collective net long has shrunk from almost 41,000 contracts in the middle of March to just 1,781. Zinc market dynamics did not turn out as expected last year, a third year of falling mine production restraining metal output and pulling the market into a small 15,000-ton deficit. That will turn to a 93,000-ton surplus this year, according to ILZSG. Global mine output is forecast to grow by a robust 4.3% year-on-year, feeding a 1.8% rise in refined metal production. There are signs this turnaround is already happening. Spot smelter treatment charges have bounced higher from last year's record lows, signalling improved availability of mined concentrate. Chinese smelters have pounced on the extra supply with first-quarter imports of zinc concentrates up by 37% year-on-year in the first quarter of 2025. However, zinc demand will not be enough to absorb the extra supply. ILZSG is forecasting usage to rise by just 1.0% in 2025, a significant downgrade from the 1.6% rate expected at the Group's September 2024 meet. Zinc's problem is that 55% of global demand comes in the form of galvanised steel for construction, a sector that is weak everywhere, not least in China. Moreover, the group said even its modest forecast growth rate may be optimistic if global economic growth slows "due to uncertainties linked to trade policy". MORE WEIGHT FOR HEAVY METAL Lead's demand profile is quite different from that of its sister metal with automotive batteries accounting for 65% of total usage and replacement demand accounting for around 75% of that. Weak automotive sales and an underlying shift towards electric vehicles, which use smaller lead-acid batteries than internal combustion cars, combined to drag global lead demand down by 0.8% last year. ILZSG is expecting a return to 1.5% growth in 2025 on the back of stronger passenger car production in the West and China. But refined production will rise by a faster 1.9%, generating an expected 82,000-ton supply surplus. The lift in mined zinc output this year will inevitably mean more lead and ILZSG forecasts mined lead supply will grow by 2.3% in 2025. A forecast third year of lead over-supply will reinforce funds' bear positioning in the LME market. Investors were net short of LME lead to the tune of a record 25,700 contracts in January. Many got burned as LME three-month metal rose to $2,100 per ton in March but the early-April collapse to a two-and-a-half year low of $1,837.50 has seen the bears return. The net short has grown back to over 23,000 contracts. SHRINKING PREMIUM The lead price has proved surprisingly resilient given conspicuous surplus in the form of elevated exchange inventory. LME three-month metal is trading marginally up on the start of January. That has shifted the relative-value trade between the sister metals with zinc's premium over lead contracting from over $1,000 per ton in December to $668. With so much lead demand coming from replacement batteries, the heavy metal is less vulnerable to the sort of macro turbulence highlighted by the ILZSG in its zinc forecasts. Moreover, funds are already so bearish on lead's price prospects, it's hard to see how much more selling they can muster. Zinc, by contrast, is a market in supply transition and funds have only started turning bearish as evidence of that shift in dynamics accumulates. Just how more bearish they could become remains to be seen.
