As European Smelters Commence, Zinc Prices Likely to Stabilize

For a long time now, the prices of Zinc have been impacted by a plethora of economic information as well as political and geopolitical developments, pandemic measures, and societal unrest. Following a year in which consumer price inflation continuously exceeded forecasts due to Russia's invasion of Ukraine, the bloc begins 2023 with the hope that this dynamic will reverse and with a more optimistic prognosis for its near-term economic future. The likelihood that the euro zone's inflation plague would lessen earlier than anticipated is increasing due to cratering natural-gas costs due to the pleasant winter weather. The Chief European Economists believe there is a probability that headline inflation will hit the European Central Bank's (ECB) 2% objective in the fourth quarter of 2023 rather than in 2025.

With a recent price surge to a six-month high of more than $3400 per tonne, Zinc's reputation as the underdog of industrial metals has temporarily been forgotten. Additionally, thanks to declining energy prices that have prompted smelter restarts in Europe, the price of Zinc powder in various end-user industries, such as chemicals, nutraceuticals, and food and beverage, is likely to rise further.

Low London Metal Exchange (LME) stocks are largely attributable to the closure of a few European Zinc smelters last year due to high energy prices. As speculators applauded the lifting of China's COVID-19 limitations, the price of three-month LME Zinc rose recently along with other base metals, reaching its highest level in more than four months. Due to the Lunar New Year vacations in China, the world's largest consumer, Zinc yesterday, on January 24, settled up by 0.1% due to profit booking. Zinc inventories on the London Metal Exchange have dropped to their lowest levels in over three decades, but increasing stocks and sluggish Chinese demand in the nutraceutical and pharmaceutical sectors are allaying fears about potential shortages.

ChemAnalyst predicts that Zinc prices will stabilize after experiencing continuous fluctuations in the demand-supply dynamics because European smelters have resumed domestic production in response to the steady end-user demand.