A potential supply squeeze in zinc could send prices higher. If you look at zinc price trends from this past year, it’s hard to identify what you might call a “clear trend.” After building from a pandemic-driven low of just $1,960 a ton, the metal skyrocketed to over $4,500 just four months ago. Unfortunately, pride cometh before a fall. And fall zinc did. In fact, by mid-July, it had sunk below $2,700 only to bounce back to the mid $3,000s in August.
Supply and demand being what they are, reduced gas from Russia has caused energy prices to skyrocket all over the continent. This has, in turn, forced multiple smelting operations to curb their overall output of energy-intensive metals. Among the first commodities on the chopping block? Aluminum and zinc. After all, both of these metals require vast amounts of electricity, and – quite frankly – many smelters simply can’t afford them anymore.
So, sure, it’s possible that demand will plummet alongside prices. But even if this were to happen? How long would that last? Moreover, would the drop be able to outpace an energy crises that seems to have no end in sight?As the world’s second-largest economy and primary source of countless commodities, China has a lot of say when it comes to metal pricing. Unfortunately, Beijing recently imposed stringent poweracross the country, drastically reducing national smelting capacities.