Steel, Aluminum, and Copper are among the top widely used metals that also heavily impact global economic growth around the world.
I think most people are aware of this but the other widely popular metal apart from these three is ‘Zinc’ which plays a vital role in economic growth and heavily contributes as one of the major components in buildings, ships, vehicles, etc. Currently, it is measured at about 1.9 billion tonnes of identified resources.
Its non-acidic nature allowed this metal to be used for:
- Galvanization of steel,
- Making alloys like brass,
- Die-casting parts, and much more.
Technically, one-third of the zinc produced is used for galvanizing other metals such as iron and steel. But, despite this, zinc also has many applications. Currently, Australia, China, Peru, Mexico, and the United States are among the top 5 zinc countries with the most zinc. However, India is one of the top countries which do zinc mining.
A while back, gold & silver were among the major and favourite commodities but nowadays zinc has become one of the precious metals traded in the commodity market. The producers, marketers, exporters, and processors are among the consisting stakeholders of zinc in the commodity market.
With the exposure of the commodity market in India, many traders get to know about trading in zinc however, most of them failed to make potential profits due to immense fluctuation in the commodity market.
Here in this guide, we will talk about the factors affecting the prices of zinc in the commodity market.
Factors Influencing the Zinc Prices
The price of zinc is mostly affected by the following factors:
Chinese Zinc Consumption
The very first thing you should look for is how the Chinese supply is keeping up with demand. China plays a vital role in determining zinc prices. You should know that the major application of zinc is to coat steel. Not more but at least it holds around 50 percent of the zinc market.
The second major application of zinc is die casting. In short, steel coating and die-casting are the two main consumers of zinc. Therefore, the prices of zinc are very dependent on these two industries. Overall zinc consumption continued to increase in developing countries.
As an emerging country, Chinese development in infrastructure and galvanized zinc is a major indicator of determining zinc prices. Any undertaking project or hold-off can create huge fluctuations in zinc prices and change the flow of the zinc market.
Apart from this, the Chinese monetary policies also influence the prices of zinc. The tighter policies can depress the demand while the stimulating measures can increase the demand for this commodity.
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Auto & Construction Sector
If you are planning to trade in zinc commodity then we would recommend you to keep an eye on the steel coating sectors and die-casting in auto sectors in developing countries. As we mentioned before, most of the zinc is used in coating steel and die-castings in vehicles, so any major change in the construction and auto sector could affect the zinc prices in the commodity market.
With the continuous demand for more vehicles, the new vehicles are made for both commercial and personal purposes, where zinc alloys continue to be used which will further increase in demand.
The Surge in Mine Supply
Like demand, it is crucial to check the zinc mine production data of top zinc mining countries like China, Peru, Australia, USA, Mexico, and India to know to look at how zinc supply is keeping up with global demand. Any closure in the no. of mines for new projects can fluctuate the prices of zinc which could imbalance the zinc’s demand & supply.
The inventory release data could forecast the future direction of zinc prices and get clues about supply shortages and surpluses.
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Economic Events
Domestic economic events also play a major role in determining zinc prices. The surge in industrial growth, global financial crisis, or any sign of recession or inflation could affect zinc prices in the commodity market.
That is why it is important to consider these key factors in determining zinc prices while trading in zinc. It is wise to not get caught unprepared. I hope this article will help you understand the key factors affecting zinc prices.
Nevertheless, if you have any queries or would like to suggest something then please do not hesitate to mention them in the comment section below.