Zinc Price Forecast 2026: Supply Surge Signals Downside Risk Despite Near-Term Momentum

After a volatile 2025 marked by conflicting market signals, the zinc price forecast for 2026 remains highly uncertain. The metal that closed 2025 near US$3,088 per metric ton—roughly where it began—faces a structural headwind: rapidly expanding supply will outpace modest demand growth, setting the stage for potential price pressure in the year ahead. Yet near-term dynamics tell a different story, with analysts expecting upward momentum through the first half of 2026 before a reality check arrives once global oversupply fully materializes.

2025: A Year of Volatility and Conflicting Signals

Zinc began 2025 at US$2,927 per metric ton on January 2 before weakness in the opening quarter sent prices sliding to US$2,855 by March 30. The real shock came in April when a broad selloff swept through base metals markets, triggered by US President Donald Trump’s tariff announcements. By April 9, zinc had plunged to a yearly low of US$2,562—a 14% retreat that reflected broader concerns about potential recession impacts on construction and automotive sectors, both intensive users of galvanized steel.

From that trough, however, zinc entered a recovery phase. The metal gradually climbed through the second half of the year, reaching US$2,753 by June 30, then accelerating gains as it touched US$2,954 on September 30 and ultimately closed 2025 at US$3,088 on December 29. The rebound underscored the disconnect between macro uncertainty and the metal’s underlying supply-demand fundamentals—a tension that will likely define 2026 as well.

The Perfect Storm: Tariffs, Housing Weakness, and Regional Divergence

Three interconnected factors shaped zinc’s 2025 performance and will continue to challenge the metal in 2026. First, US housing affordability remains severely impaired despite tariff concerns moderating. New home prices and elevated mortgage rates have created a stagnant market, with new housing starts lagging and unsold inventory accumulating. Without policy intervention, this headwind will persist into 2026.

Second, China’s real estate collapse shows no signs of reversal. Developers including Evergrande and Country Garden filed for bankruptcy years ago, and despite multiple government stimulus packages, the sector remains depressed. November 2025 sales from China’s top 100 developers fell 36% compared to 2024 and were down 19% through the first 11 months of 2025. This deterioration is critical because China consumes roughly one-third of global zinc supply.

Third, and most crucial, a severe regional imbalance has emerged. While Chinese zinc production runs at a significant surplus, the rest of the world—particularly Europe, the Americas, and Southeast Asia—faces deficit conditions. This geographic fault line creates price volatility and supply chain complexity that simple aggregate numbers fail to capture.

Supply-Demand Imbalance: Production Surge Outpaces Demand Growth

The International Lead and Zinc Study Group (ILZSG) projects a structural mismatch for 2026. On the supply side, refined zinc production will jump 2.4% to reach 14.13 million metric tons, driven by capacity additions and mine startups across multiple jurisdictions. Key additions include the restart of Portugal’s Almina-Minas Aljustrel mine, commissioning of Bunker Hill Mining’s flagship Idaho facility, and commercial production launch at China’s Xinjiang Huoshaoyun mine—which will rank as the world’s sixth-largest lead-zinc operation.

Meanwhile, demand growth remains tepid. Global refined zinc consumption is anticipated to rise just 1% to 13.86 million metric tons in 2026. European demand should post modest 0.7% expansion following similar growth in 2025, but Chinese demand faces headwinds. After a projected 1.3% gain in 2025, ILZSG analysts expect Chinese zinc usage to be flat in 2026 as the real estate downturn persists through 2027.

This imbalance translates into an estimated global surplus of 271,000 metric tons for 2026—far larger than the 85,000 MT surplus ILZSG recorded for 2025. Interestingly, London Metal Exchange (LME) inventory levels tell a contradictory story: stocks plummeted from 230,325 MT on January 2 to just 33,825 MT by November 1, 2025. This paradox—rising supply but shrinking stockpiles—suggests either demand destruction in late 2025 or delays in physical delivery, but it cannot last indefinitely.

What the Zinc Price Forecast Reveals: Near-Term Upside, Structural Concerns

Regarding specific zinc price forecast expectations, the December Fastmarkets report suggests momentum will carry into the first half of 2026, building on the 2025 average of approximately US$3,218. The logic: regional disparities will persist near-term, supporting prices as Western markets bid aggressively for scarce supplies while China operates at surplus.

However, Fastmarkets expects a critical inflection in the second half of 2026 as global oversupply emerges fully. Analysts project zinc prices will decline once the market achieves better balance and global surpluses begin materializing through 2027.

Morgan Stanley has weighed in with a conservative 2026 base case calling for a yearly average of US$2,900 per metric ton, implying downside from current levels. Meanwhile, Argus research highlights that long-term contracts have slowed amid depressed LME inventory levels, creating uncertainty and sustaining prices temporarily. However, manufacturers remain reluctant to issue fresh sales orders, leaving producers in a wait-and-see posture—an untenable position once supply truly floods markets.

Geopolitical Wildcards and Investment Implications

One significant wildcard remains US trade relations with China. Zinc has been designated a critical mineral by the US government for its use in galvanized steel for infrastructure and defense applications. South32’s Hermosa project has already secured FAST-41 approval, enabling streamlined permitting. Deteriorating US-China trade relations could represent a genuine blessing for Western producers, potentially triggering policy support or supply chain reshoring that boosts non-Chinese zinc demand.

Similarly, the Trump administration’s December 17 policy proposals for housing stimulus could unlock demand if executed, potentially increasing downstream zinc consumption from renewed construction activity.

Yet these possibilities remain speculative. For the intermediate term, the structural reality dominates: refined zinc supply will expand substantially while demand growth languishes. The zinc price forecast ultimately hinges on whether supply constraints (reflected in plummeting LME stocks) can offset demand weakness—a balance unlikely to persist indefinitely.

Patient investors monitoring how the sector evolves may find tactical opportunities in the coming months, but the directional bias shifts toward caution as 2026 progresses and surplus conditions overwhelm the market.