Zinc prices have recently bounced back after a period of weakness, mainly because smelter shutdowns are tightening the supply of refined zinc. This rebound comes despite some challenges on the demand side, especially in China where manufacturing activity remains subdued.
Several factors are at play. On the supply front, major producers are cutting output. For example, Teck Resources’ Red Dog Mine in Alaska—the world’s largest zinc mine—is producing about 20% less than last year as it nears depletion. Meanwhile, Nyrstar’s Australian smelter announced a 25% reduction in its zinc output for 2025 due to ore shortages that have made treatment charges uncompetitive. These cutbacks reduce the amount of refined zinc entering the market and help support prices.
On the demand side, things look mixed. In China, inventories at the Shanghai Futures Exchange increased by around 800 tonnes recently as manufacturers limited their purchases to only what they need immediately rather than stocking up. This cautious buying is linked to weak industrial activity; China’s official Purchasing Managers’ Index (PMI) has stayed below 50, signaling contraction in manufacturing and dampening downstream consumption of zinc used for galvanizing steel.
Additionally, local markets like Tianjin have seen premiums on common domestic zinc brands fall into discount territory due to several reasons: rising prices discouraging buyers from purchasing large quantities; severe weather causing production disruptions; inventory build-ups putting pressure on local premiums; and buyers shifting toward more conservative purchasing strategies focused on short-term needs rather than stockpiling.
Despite these demand headwinds and inventory increases weighing on spot prices temporarily—zinc futures eased slightly from near three-month highs—the ongoing supply constraints from mine depletion and smelter cuts create a tighter overall market balance globally. The International Lead and Zinc Study Group noted that while there is still a surplus this year compared to previous years, it has narrowed somewhat recently.
Looking ahead through 2025, zinc prices are expected to remain relatively firm because industrial demand continues alongside constrained mining output worldwide. However, if energy costs ease or mining production improves later this year, some price corrections could occur—but for now tight refined supplies due to smelter shutdowns keep upward pressure on zinc pricing amid uncertain but steady global consumption patterns.