According To Industry Titans, What Lies Ahead for the U.S Market of Zinc
- 28-Dec-2022 4:20 PM
- Journalist: Rene Swann
The U.S. economy will remain in a precarious position by the end of 2022. The U.S. Federal Reserve is vehemently combating inflation with interest rate increases that aim to decrease consumer demand, but prices of commodities and base metals, including Zinc, across the country remain stubbornly high, and in solving one issue, the American central bank runs the risk of creating another: a recession. The chief economist of an American Bank predicted that the U.S. economy would most certainly enter a recession over the course of the following year if one is not already present. "The comforting prospect is that by a year from now, the supply and demand imbalances that have contributed to historically high inflation should be considerably less of a problem."
The average industrial raw materials price index is expected to decline by 9.5% in 2023, according to industry titans and significant market players, as raw material supply limitations brought on by the conflict and the sluggish economic recovery in 2021 continue to lessen. As the market rushed to replace lost supplies from Europe, base metal prices, notably Zinc, spiked in the first half of 2022. There have been policy-driven decisions to boost the construction and manufacturing of Zinc powder in China, as well as rising demand for Asian production generally, as much of European capacity is shuttered amid the energy crunch there. These factors will keep a floor under the Zinc metal prices in 2023, with the majority of production taking place in Asia.
There is still a lack of supply and demand for London Metal Exchange (LME) Zinc both domestically and internationally. If this winter is particularly cold, it will be interesting to observe if Zinc smelters in Europe plan to suspend or reduce production for an extended period of time. Price increases for Zinc powder will result from this. Similarly, it has not yet been determined if the projected economic downturn will cause Zinc Powder consumption to decline any further in the forthcoming period. The short squeeze continues to be the largest worry for the domestic U.S. market against the backdrop of critically low inventories, which might lead to significant Price increases of Zinc Powder as expected by market participants.