2026 Zinc Price Forecast: Navigating Supply Surplus and Market Uncertainty

The zinc price forecast for 2026 hinges on a critical imbalance: robust supply growth meets subdued demand recovery. After a volatile 2025 marked by tariff-induced turmoil and subsequent stabilization, the market enters a new phase where oversupply dynamics may pressure prices despite structural support from geopolitical tensions and critical mineral designations. Understanding these competing forces is essential for investors and producers navigating the year ahead.

What Shaped Zinc Prices in 2025: From Tariff Shocks to Steady Recovery

The year began with zinc holding relative stability, opening at US$2,927 per metric ton (MT) on January 2 before settling near US$2,855 by end of March. The second quarter, however, delivered a sharp shock. On April 9, following the Trump administration’s “Liberation Day” tariffs announcement, zinc plummeted 14 percent to a yearly low of US$2,562 as analysts warned of potential recession risks that could cripple demand for galvanized steel in housing and automotive sectors.

Yet the market proved more resilient than feared. As tariff threats eased and global recession concerns abated, zinc staged a steady recovery through the remainder of the year. By June 30, prices had climbed back to US$2,753, and the upward momentum accelerated through fall, reaching US$2,954 by September 30 and US$3,088 by December 29. This recovery masked underlying structural stress in key demand regions. The US housing market struggled with affordability challenges, resulting in stagnant new housing starts and a growing glut of unsold inventory. Meanwhile, China’s real estate sector—decimated by the Evergrande and Country Garden bankruptcies—showed no meaningful recovery despite years of government stimulus measures. CNBC reported that November sales from China’s top 100 developers fell 36 percent year-over-year, with cumulative 2025 sales down 19 percent, representing what analysts termed a “real and concerning” deterioration.

These demand headwinds collided with rising supply. The International Lead and Zinc Study Group (ILZSG) reported that during the first 10 months of 2025, zinc mine production reached 10.51 million MT—up from 9.87 million MT in 2024—while refined production rose to 11.52 million MT from 11.12 million MT. Demand climbed modestly to 11.44 million MT from 11.19 million MT, resulting in a projected annual surplus of 85,000 MT. Interestingly, despite this oversupply, London Metal Exchange (LME) stockpiles contracted sharply from 230,325 MT on January 2 to just 33,825 MT by November 1—a signal that tight near-term availability was masking underlying structural excess.

2026 Zinc Supply Surge: Global Surplus Looms Larger

Looking ahead to 2026, the supply-demand imbalance appears set to widen significantly. The ILZSG forecasts that global refined zinc demand will inch upward just 1 percent to 13.86 million MT. Chinese demand remains the critical variable; while the group anticipated a 1.3 percent gain in 2025, it projects demand will stagnate entirely in 2026 as the real estate slump extends into 2027. European demand is expected to grow a modest 0.7 percent after similar weakness in 2025. US demand faces headwinds from high mortgage rates and elevated home prices, though recent policy proposals from the Trump administration may provide a catalyst for renewed housing activity and downstream zinc demand.

Supply, by contrast, surges dramatically. The ILZSG predicts zinc mine production will jump 2.4 percent to 12.8 million MT, driven by higher output across existing operations in Europe, Australia, Brazil, the Democratic Republic of Congo, and China. Three major production events are anticipated: the restart of Portugal’s Almina-Minas Aljustrel mine, the commissioning of Bunker Hill Mining’s flagship mine in Idaho, and the launch of commercial production at China’s Xinjiang Huoshaoyun mine—destined to become the world’s sixth-largest lead-zinc operation. Refined zinc output is projected to increase 2.4 percent to 14.13 million MT as concentrate availability expands in Brazil, Canada, Norway, and China. Collectively, these trends suggest a global supply surplus of 271,000 MT for 2026—more than triple the 2025 projection.

What the Zinc Price Forecast Consensus Reveals

The zinc price forecast from major financial institutions reflects this bearish structural backdrop, though with important nuances. Fastmarkets’ December report suggests upward momentum from the 2025 LME average of US$3,218 will persist through the first half of 2026, driven by regional supply-demand disparities where Chinese production runs at surplus while other regions face relative tightness. However, Fastmarkets expects this near-term support to erode in the second half as global surpluses accumulate, pressuring zinc prices downward thereafter.

Morgan Stanley recently revised its 2026 zinc price outlook to a yearly average of US$2,900—a roughly 10 percent decline from 2025’s LME average. An November Argus report adds another layer of complexity: long-term zinc contracts have slowed amid depressed LME inventory levels, creating near-term price support through seller uncertainty and buyer caution. Manufacturers have grown reluctant to issue forward sales orders, leaving producers in a tactical holding pattern as they monitor whether low inventory conditions prove temporary or structural.

Strategic Wildcards: Geopolitics, Policy, and Critical Mineral Status

Several wildcards could alter the zinc price forecast trajectory. Zinc has been designated a critical mineral in the US for its essential role in producing galvanized steel for infrastructure and defense applications. South32’s Hermosa project in Arizona has already received FAST-41 approval, unlocking streamlined regulatory pathways that could accelerate US production capacity. Growing trade friction between the US and China—the world’s largest zinc producer—creates a potential strategic opportunity for Western producers. If trade relations deteriorate further, US and allied zinc producers could capture additional market share and pricing power, providing an alternative ballast against global supply excess.

However, structural headwinds appear more powerful than these potential policy supports. As long as refined zinc supply remains decisively in surplus against a backdrop of weak underlying demand growth, the zinc price forecast points toward a challenging environment for bulls. This dynamic may present opportunities for contrarian or patient investors willing to adopt a measured approach, allowing the market to work through excess supply before committing significant capital to the sector.