What could a new administration in the White House, or new economic stimulus measures in China mean for the zinc market? And which factors should investors consider in 2025? Here's what experts see coming.
How will Trump's return impact the zinc market?
One of the big stories of 2025 is Donald Trump’s return to the White House in the US. This event will have a broad impact across many industries, and has significant implications for the resource sector.
Trump has made an array of promises, one of which is to improve permitting times for projects costing above US$1 billion, a move that some experts believe could make the US more attractive for base metals projects.
One asset that may benefit from improved permitting under Trump is South32’s (ASX:S32,OTC Pink:SHTLF) Hermosa property, located near Tucson, Arizona. Its cost stands at over US$2 billion, and it has already seen improved permitting timelines through the US Federal Permitting Improvement Steering Council.
Trump's promise to free up federal lands for new housing could also be a boon for zinc producers, as this would mean greater demand for galvanized steel products that use the base metal.
However, Trump's platform also heavily favored imposing new tariffs, which could create inflationary pressures.
While there's still much uncertainty about how tariff plans will play out, higher costs for materials used by homebuilders could significantly weaken demand for new homes, regardless of available federal support.
In an interview with the Investing News Network (INN), Daniel Smith, head of research at Amalgamated Metal Trading (AMT), said China will be the biggest problem with imposing new tariffs.
“What’s happened (in 2024) is that China’s had very weak domestic demand for a lot of base metals, but it’s been saved by the export side, so they’ll come under threat more next year with the tariff barriers going up,” he said.
Smith also suggested that the proposed tariffs may ultimately have less impact than expected, commenting, “Trump’s bark is worse than his bite, so I don’t think it’s going to be particularly bad.”
In a January 9 article, Smith further notes that Trump has limited power to drive markets, and there may be a disconnect between his rhetoric and the policies he can implement as president.
He goes on to say that global factors are often more important as market drivers.
Nevertheless, China is already looking to expand manufacturing in places like Mexico and Vietnam. This would allow it to avoid the higher prices that may be imposed on goods produced directly in China.
At the same time, Smith pointed out that it's very hard that for base metals consumers to avoid materials from China, which has led to some concern about increasing supply in the US.
“It’s very difficult to build new smelters. So China normally produces a lot of metal, but also manufactured goods. The typical route is manufactured goods end up in the US, so there’s been some attempts to build out new capacity in the US, but it's really very slow,” Smith commented to INN.
Tom Rutland, senior analyst at CRU Group, also spoke about potential Trump tariffs.
“By far, the biggest implications of the tariffs will be on US premia and the potential knock-on impact they will have on US zinc demand. For now, we do not expect it to impact zinc supply in any way,” Rutland told INN via email.
Zinc supply and demand in 2025
Overall, experts see zinc supply and demand remaining relatively similar from 2024 to 2025.
CRU expects mine supply to grow moderately, rising by 1.9 percent year-on-year, with a slight increase in refined output of 0.3 percent. Meanwhile, the firm expects demand to grow by 0.3 percent.
Some of this increase may come from Russia as the Overnoye mine in Eastern Siberia is expected to start production in 2025. The mine was originally slated to begin ramping up output in late 2023, but stalled after a fire destroyed critical equipment. Production was reported to have started in November 2024, but Rutland is skeptical.
“Replacing the damaged equipment was complicated by the sanctions imposed on Russia, meaning the mine had to replace the equipment with domestic technology, which we believe is unlikely to have been possible to have achieved to a high standard over such a short time frame,” he commented to INN.
Rutland doesn’t see Overnoye making a substantial contribution to zinc supply in 2025 either.
However, once the Russian mine is fully operational, it will add an additional 600,000 metric tons of zinc concentrate per year, accounting for 4.5 percent of total zinc production.
Another mine that may begin to ramp up in 2025, is the Xinjiang Huoshaoyun lead-zinc mine in China. The operation has also faced significant delays due to terrain and weather.
“It’s a very large mine in Xinjiang province, which is an extremely difficult place to do mining. It’s very high and subject to extreme weather conditions like sand storms, so it’s been quite a challenge to ramp that mine up as well,” said Smith.
With reserves of over 21 million metric tons, it will be the world's sixth largest lead-zinc mine once operating.
Investor takeaway
Even though zinc performed well in 2024, both supply and demand were weak. Barring any rebound in the Chinese or European construction and manufacturing sectors, these conditions are expected to continue in 2025.
Looking forward, Rutland sees the price of zinc remaining flat in the new year, and expects the base metal to average US$2,850 per metric ton, with the concentrate and refined markets in balance.
Smith shared a similar sentiment on supply and demand in 2025, but was more optimistic, suggesting that the price of zinc could push up to the US$3,300 range this coming year.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Group Eleven Resources is a client of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Aerial view of the Matagami Mining Camp
