Commerzbank Sees Zinc Prices Averaging $3,800/mt in 2023, Citing Tight Supply and Recovering Chinese Demand

SHANGHAI, Feb 22 (SMM) – According to foreign media news on February 21, the research team of Commerzbank said that due to the tight supply and the recovery of Chinese demand, the average price of zinc is expected to be $3,800/mt in 2023.　　

It is worth mentioning that LME zinc fell to $2,982.5/mt on February 16, a new low since January 6, 2023 due to macro headwinds. But LME zinc posted three consecutive days of rally recently. On February 20th, it once reached $3,149/mt, setting a new high since February 9th.

However, judging from the current situation, as the price of natural gas continues to fall, overseas smelters have gradually moved into profit-making territory. The French Auby smelter with a production capacity of 150,000 mt announced that it will resume production in early March. However, the recovery of overseas consumption is not satisfactory, and the support for zinc prices has weakened amid increasing supply. Therefore, LME zinc stopped rising and dipped 0.66% yesterday.

It is worth mentioning that since the second half of 2021, European energy problems once led to a sharp reduction in production by local smelters. This was mainly caused by Europe's high dependence on external energy and insufficient renewable energy. Therefore, in order to meet the requirements for energy transformation and carbon emissions, zinc smelters in Europe and other countries have gradually developed power plants that use renewable energy.

Leading enterprises such as Nyrstar's Balen in Belgium and Budel in the Netherlands have begun to save electricity costs through wind power plants and compressors.

SMM previously predicted that with the continuous energy transformation of various smelters around the world and the gradual establishment of wind power plants, smelters will gradually enrich their power sources and get rid of a relatively single power source. It is expected that as more smelters focus on energy issues, the impact of energy issues on smelters will be weakened in the future.