Is Zinc Headed for Volatility? 2026 Price Outlook with 30-Year Context

The zinc market faces a critical juncture heading into 2026. After trading around US$3,088 as 2025 drew to a close, the metal—essential for producing galvanized steel used across housing and manufacturing—now confronts mounting supply pressures that could reshape pricing dynamics over the coming year.

Market Reality Check: Supply Outpacing Demand

The real story isn’t what happened in 2025; it’s what’s about to happen. The International Lead and Zinc Study Group projects a staggering global refined zinc surplus of 271,000 MT for 2026, nearly triple the 85,000 MT surplus recorded in 2025. This isn’t a minor imbalance—it signals structural challenges ahead.

Production is climbing faster than consumption. While zinc mine output is expected to rise 2.4 percent to 12.8 million MT, demand growth remains anemic at just 1 percent, reaching 13.86 million MT globally. New supply sources are entering the pipeline, including the restart of Portugal’s Almina-Minas Aljustrel mine, the commissioning of Bunker Hill Mining’s Idaho operation, and China’s Xinjiang Huoshaoyun mine—which will rank as the world’s sixth largest lead-zinc operation.

Refined zinc production is similarly climbing, anticipated to increase 2.4 percent to 14.13 million MT. This supply surge comes amid modest demand growth, particularly from China where the real estate collapse continues to weigh heavily.

The China Question: Demand Stagnation Persists

China’s housing crisis remains the elephant in the room. November sales from the country’s top 100 developers plummeted 36 percent compared to 2024, with year-to-date declines of 19 percent through November 2025. The International Lead and Zinc Study Group expects Chinese zinc demand to remain flat in 2026 despite modest gains anticipated for 2025.

This creates a curious dynamic: China, the world’s largest zinc producer, faces oversupply at home while the rest of the world grapples with tightening inventories. London Metal Exchange stockpiles have compressed from 230,325 MT in early January to just 33,825 MT by November—a dramatic 85 percent reduction that initially supported prices despite underlying supply abundance.

2026 Price Forecast: Diverging Expert Views

Where does this lead for zinc pricing? The analysis splits into competing scenarios.

The Fastmarkets perspective suggests momentum from 2025’s US$3,218 LME average could push prices higher through the first half of 2026, buoyed by regional supply-demand imbalances. However, as global surpluses materialize in the second half, the firm anticipates downward pressure returning by year’s end.

Morgan Stanley’s stance is more bearish, forecasting a 2026 average of US$2,900—below current levels and suggesting a 6-7 percent pullback from recent trading. This projection reflects concerns about persistent oversupply overwhelming near-term inventory tightness.

Argus Market Research adds nuance: long-term contract activity has slowed due to low LME inventories, creating near-term pricing uncertainty. Manufacturers remain cautious about forward purchases, leaving producers in wait-and-see mode. This hesitation could sustain near-term price support, but it’s fragile.

Geopolitical Wildcards: Trade and Critical Materials

One variable could disrupt these forecasts: geopolitics. The Trump administration’s trade policies and the deteriorating US-China relationship create both risks and opportunities. Zinc is classified as critical for US infrastructure and defense applications, with FAST-41 approval already granted to South32’s Hermosa project.

Elevated US-Western producer capacity could redirect demand westward, supporting prices in developed markets. However, this benefit remains speculative until concrete policy shifts materialize.

Investment Takeaway: Patience Required

The zinc market in 2026 presents a classic oversupply quandary. Near-term inventory tightness may provide tactical support, but the fundamental picture—mounting supply against tepid demand—argues for caution. Patient investors might find opportunities if prices decline toward US$2,800-US$2,900 levels, particularly with an eye toward long-term structural shifts in energy transition and infrastructure spending.

For those tracking zinc across decades, the metal remains cyclical rather than directional. Position sizing accordingly.