Supply Chain Pressures Drive Price Volatility

• Mine Closures: Major zinc mines in Australia and Peru suspended operations due to regulatory issues and community protests, reducing global supply by an estimated 80,000 tons in Q2 2025.
• Logistics Challenges: Congestion at Chinese ports delayed zinc concentrate imports, tightening domestic supply. China, the world’s largest zinc consumer, saw inventories drop to a five-month low of 120,000 tons.

Policy Initiatives Shape Industry Landscape

1. EU Carbon Border Adjustment Mechanism (CBAM):
   • Effective October 2025, the CBAM will impose carbon tariffs on imported steel products, including galvanized steel. Producers using high-carbon intensity processes face additional costs of €40-60 per ton.
   • European steelmakers like ArcelorMittal are accelerating shifts to electric arc furnace (EAF) production, which reduces carbon emissions by 75% compared to traditional blast furnaces.
2. U.S. Infrastructure Bill:
   • The $1.2 trillion Infrastructure Investment and Jobs Act has boosted demand for galvanized steel in bridge construction and transportation projects. Domestic producers, such as Nucor, are expanding capacity to meet expected 15% growth in infrastructure-related demand by 2026.

Technological Breakthroughs Enhance Sustainability

• Low-Temperature Galvanizing: Chinese researchers at Tsinghua University developed a novel electrolyte formula that reduces zinc consumption by 12% and energy usage by 20% during the hot-dip process. The technology has been piloted at Baosteel’s facilities, achieving corrosion resistance comparable to traditional methods.
• Recycled Zinc Initiatives: Umicore, a global materials technology company, launched a closed-loop system for zinc recycling from end-of-life galvanized steel. The process recovers 95% of zinc content, with plans to scale up production to 50,000 tons/year by 2027.

Trade Tensions Add Uncertainty

• U.S.-China Tariffs: The U.S. Department of Commerce extended anti-dumping duties of 256% on certain Chinese galvanized steel products, citing unfair pricing practices. Chinese exports to the U.S. have dropped by 60% since the measures were implemented in 2023.
• Southeast Asian Supply Chain Shifts: To bypass tariffs, Chinese manufacturers are rerouting production to Southeast Asian countries like Vietnam and Thailand, where free trade agreements offer tariff exemptions.

Outlook