Zinc

GLOBAL DEMAND & SUPPLY

Resilience in prices amidst volatility

In FY2025, zinc prices stayed buoyant despite significant fluctuations driven by macroeconomic uncertainties, with the LME zinc price averaging at US$ 2,875 per tonne, reflecting a 16% increase compared to US$ 2,475 per tonne in FY2024. Prices peaked in October 2024 at US$ 3,102.91 per tonne, driven by inventory drawdowns, before moderating to US$ 2,887.83 per tonne by March 2025. LME and SHFE stocks dropped to 141 kt and 72 kt, respectively, as of March 2025 end, a steep reduction from March 2024 levels of 264 kt and 122 kt, respectively.

Tightening supply dynamics

The supply side showed retraction, with global refined zinc production dropping by 4% to 13,167 kt in CY2024, compared to 13,712 kt in CY2023. Meanwhile, demand saw moderate growth, with global refined consumption rising 1.7% to 13,602 kt in CY2024, compared to 13,369 kt in CY2023, resulting in a market deficit of 436 kt.

Trade disruptions balanced by regional growth

Starting early CY2025, global trade dynamics presented challenges driven by aggressive US tariff policies, pressuring disposable incomes in the US and potentially slowing industrial activity. However, infrastructure spending in China and Germany helped counterbalance these effects. Germany’s €500 billion infrastructure and defence investments are expected to support 2.9% annual growth in regional zinc consumption between 2025 and 2027. The zinc consumption outlook in Europe improved unexpectedly, with 3.8% growth in CY2024, surpassing earlier estimates.

Indian zinc market

Strong domestic demand

India remained a key player in primary zinc consumption, with FY2025 demand reaching 783 kt. The strong zinc consumption growth in FY2025 was supported by robust manufacturing and infrastructure investment. The HSBC S&P Global India Manufacturing PMI climbed to 58.1 in March 2025, signalling steady industrial momentum despite a slower Index of Industrial Production expansion from 4.9% in March 2024 to 2.9% in early 2025.

Core sectors like cement and steel sustained growth, while consumer confidence remained moderately optimistic despite easing slightly. India’s domestic finished-steel production rose by 5% to 146 Mnt, while consumption surged by 14% to 128 Mnt, largely driven by higher government spending.

Resilient outlook

Looking ahead, India’s manufacturing remains resilient, supported by strong domestic demand, infrastructure investment, and protective trade policies, reinforcing its position as a key driver of global zinc consumption. The 9.8% increase in capital expenditure allocation to ₹ 11.20 trillion in the Union Budget 2025-26 is further expected to boost steel-intensive infrastructure projects and drive zinc consumption.

ZINC AS A CRITICAL METAL

Zinc plays an indispensable role in everyday lives and future technologies. It enhances the durability of infrastructure through galvanisation, making it vital for long-lasting construction. Its role in enabling global energy transition has recently gained traction, supporting renewable technologies, offering safe, recyclable energy storage in zinc-based batteries. It is also used in galvanisation of solar mounting structures. Its abundance, recyclability, and low environmental impact make it essential for clean energy production, electric vehicles, and grid-scale storage.

HINDUSTAN ZINC: BUSINESS OVERVIEW

Hindustan Zinc is the world’s largest integrated and India’s only primary zinc producer, commanding a domestic primary zinc market share of c.77%.

In FY2025, we recorded the highest-ever domestic zinc sales of 603 kt, which was 4% higher than FY2024, aligned with the overall market growth. Value-Added Products (VAP) sales reached the historical high of 179 kt, increasing its share of total primary zinc sales from c.20% in FY2024 to c.22% in FY2025. About 73% of the refined zinc produced by the Company is sold in the domestic market, and the remaining 27%, i.e. 224 kt, was exported to South-East Asia, the Middle East, and the rest of the world.

During the year, we launched Asia’s first low-carbon ‘green’ zinc, EcoZen, further expanding our one of the globally largest zinc product portfolio. Produced using renewable energy, it boasts a carbon footprint of less than 1 tCO₂e per tonne, almost 75% lower than the global average. This new offering enables the steel producers to achieve their Scope 3 emission reduction targets, providing an unmatched competitive advantage with a more sustainable choice. With LME’s announcement of introducing a green premium for sustainable metals, EcoZen is well-positioned for a stronger value realisation.

OUTLOOK

Global refined zinc production is expected to rise 4% to 13,637 kt in CY2025, while consumption is set to increase 2% to 13,892 kt, keeping the market tight. The U.S. Federal Reserve has held rates steady at 4.25 - 4.50%, watching inflation, which has eased to 2.4% but remains sticky at 2.8%. Record-high US-China tariffs continue to disrupt trade, despite talks of reducing duties to 10-20%. Geopolitical uncertainties, including Middle East tensions, are fuelling volatility in oil and base metals, driving investors towards real-asset hedges. India’s zinc market, however, is projected to grow 6-7% in CY2025, with domestic demand reaching 867 kt, supported by urbanisation, infrastructure investment, and rising disposable incomes.