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Zinc: The Commodity.com Guide


How Is Zinc Produced, Why Is It Valuable & What Drives the Price of Zinc?

Why is Zinc Valuable?

Zinc is a bluish-white element that can be refined into a metal. It resists corrosion and, therefore, is often used to galvanize iron and steel.

Zinc is used to produce brass, which is a zinc alloy that contains between 55 and 95% copper.

Andreas Sigismund Marggaf via Wikimedia
Andreas Sigismund Marggaf via Wikimedia

Zinc was formally discovered as an element by Andreas Sigismund Marggraf, a German chemist who isolated it in 1746.

However, long before this discovery, civilizations were using zinc. According to the journal Ancient Asia, miners were smelting zinc in India by the ninth century BC.

During the Roman Empire, soldiers forged brass weapons from copper and zinc, and evidence from a smelting facility shows large-scale production of the metal took place in India between 1,100 and 1,500 AD.

Today mines worldwide extract more than 11.9 million metric tons of zinc annually. Zinc mines exist in more than 50 countries around the world, and the metal plays a key role in the steel industry.

Ready to start trading zinc? Read our guide.

How is Zinc Produced?

The supply of zinc derives from two sources: primary production (mining) and secondary production (recycling). Mining provides most of the supply, although the United States Geological Survey (USGS) estimates the quantity recovered from recycling in the United States represented about 25% of total consumption.

Primary Production

More than 80% of zinc mining takes place in underground mines. Surface mining in open pits accounts for about 8% of mining, while mines that use both methods comprise the remaining 12%.

Several ores contain zinc including zinc sulfide (sphalerite), zinc carbonate (smithsonite), zinc silicate (calamine) and manganese and iron compounds known as franklinite.

Sphalerite Specimen
Sphalerite Specimen via Wikimedia

Zinc and lead ores usually occur together, and they often contain other valuable metals such as gold, silver and copper.

The process of primary production involves four steps:

  1. Ore concentration
  2. Smelting
  3. Refining
  4. Alloying

Ore Concentration

A series of steps called froth flotation breaks down the ores into particles with greater concentrations of zinc. First, the ore is ground into a fine powder and placed in flotation tanks with water, pine oil and chemicals

The tanks agitate the mixture and zinc particles float to the top, while clay and other silicates sink to the bottom.

The zinc particles are coated with chemicals to protect them from water. When air is injected into the tanks, the zinc particles adhere to the bubbles that form and remain at the top of the tank, while the remaining impurities float to the bottom. Scrapers then remove the bubbly mixture of concentrated zinc.

Filters remove the water and oils from the tank and leave behind a paste-like mixture. This mixture is combined with lime – the product made from heating limestone – and roasted in furnaces at temperatures of 2,500 degrees Fahrenheit. This produces a solid mass of zinc oxide.

Smelting

During the second step, high-powered furnaces break down zinc oxide into elemental zinc.

Vertical Retort Process for Zinc Smelting via Mliu92 on Wikipedia
Vertical Retort Process for Zinc Smelting via Mliu92 on Wikipedia

The furnaces use electricity, natural gas or coal to reach temperatures of 2,200 degrees Fahrenheit. A series of chemical reactions produces zinc and carbon dioxide. The carbon dioxide bonds with the zinc to re-form zinc oxide.

To keep the zinc separate, molten lead is introduced into the chamber. The zinc then dissolves into a molten state and gets carried to another chamber to cool.

Refining

The zinc molten, which is cooled to 824 degrees Fahrenheit, can be further purified by cooling it in the chamber for several hours. During this refining stage, iron and other impurities sink to the bottom, while pure zinc remains at the top.

Alloying

Most zinc is alloyed with other metals. To make alloys, refiners re-melt zinc and combine it in exact proportions depending on the application.

Secondary Production

Recycling zinc is an economically viable activity. In the United States, about 35,000 tons of zinc is recycled annually. Recycling materials include residue from the process of galvanizing zinc with steel and zinc oxide recovered from blast furnaces.

China is the leading zinc mining country in the world. It produces almost 40% of the annual supply of the metal.

Top 10 Zinc Mining Countries

RankFlagCountryMine Production (Thousands of Metric Tons)
#1Flag of ChinaChina4,500
#2Flag of PeruPeru1,300
#3Flag of AustraliaAustralia850
#4Flag of USAUnited States780
#5Flag of MexicoMexico710
#6Flag of IndiaIndia650
#7Bolivia FlagBolivia460
#8Flag of Kazakhstan Kazakhstan340
#9Flag of CanadaCanada310
#10Flag of SwedenSweden250

These are the reserves of each country as reported by the USGS:

Which Countries Have The Most Zinc?

RankFlagCountryThousands of Metric Tons
#1Flag of AustraliaAustralia63,000
#2Flag of ChinaChina40,000
#3Flag of PeruPeru25,000
#4Flag of MexicoMexico17,000
#5Flag of USAUnited States11,000

About one-third of zinc produced goes to galvanize other metals such as steel and iron. However, zinc has many other important applications.

5 Main Uses of Zinc

UsesDescription
Galvanizing Material

suspension bridge
Galvanization of steel and iron prevents corrosion and rusting. Electroplating is the most common method for galvanizing steel. Items including car bodies, street lamp posts, safety barriers and suspension bridges use galvanized steel.
Alloys

trumpet
Zinc combines with other metals to form strong alloys. Brass, nickel silver and aluminum solder are examples of zinc alloys. Musical instruments and hardware items use brass in construction, while electrical items and pipes use solder.
Die-Castings

Die-casting is the production of metal parts using molds. The automobile, electrical and hardware industries all use zinc for die-casting parts.
Zinc Oxide

lipstick
Manufacturers of many products use zinc oxide in production:

Paint
Rubber
Cosmetics
Pharmaceuticals
Plastics
Inks
Soaps
Batteries
Textiles
Electrical equipment
Zinc Sulfide

paint can
Zinc sulfide is an important component in many products:

Luminous paints
Fluorescent lights
X-ray screens

Zinc is also an essential nutrient for living things. A typical human body contains about 2.5 grams of zinc and consumes 15 milligrams per day. Foods with high zinc content include herring, beef, lamb, cheese and sunflower seeds.

What Drives the Price of Zinc?

The price of zinc is driven mostly by these five factors:

  1. Chinese Demand
  2. Chinese Supply
  3. Global Stocks
  4. US Demand
  5. Input Prices

Start trading zinc today with our guide.

Chinese Demand

As with most industrial commodities, China plays a pivotal role in determining zinc prices.

China is the top consumer of refined zinc used in galvanized steel.

Lupu Bridge Shanghai via Jurgenlison on Wikimedia
Lupu Bridge Shanghai via Jurgenlison on Wikimedia

Therefore, a key indicator of zinc demand in China and elsewhere is steel demand. Decisions about whether to undertake or hold off on infrastructure projects can create huge fluctuations in steel demand. Ultimately, these decisions can flow through to the zinc market.

Monetary policy from the People’s Bank of China is one important factor that can affect both steel and zinc demand. Stimulating measures can stoke demand for these commodities, while tighter monetary policies can depress demand.

China’s GDP growth has slowed considerably in recent years, creating doubts about future demand for all industrial metals including zinc. However, there are nascent signs that the economy may be rebounding.

Ultimately, zinc prices depend heavily on Chinese demand for galvanized steel in building projects.

Chinese Supply

A key factor impacting zinc output in China is the country’s increasing environmental awareness. Poor air quality has forced the government to take a harder look at the mining industry as a contributor to pollution. If China curbs the production of zinc to deal with this problem, then the country will be more reliant on imports. This could drive prices higher.

Global Stocks

The London Metals Exchange (LME) keeps track of global stock levels for zinc and other industrial metals. Traders follow these inventory levels closely for clues about supply shortages or surpluses.

LME Global Stock Levels of Zinc via Infomine
LME Global Stock Levels of Zinc via Infomine

If inventory levels drop, the market may be facing a shortage of zinc supply in the near future. This could lead to higher prices for the metal. Similarly, if stockpiling occurs and inventory levels expand, then the market might face an oversupply of the metal, which can lead to lower prices.

One interesting development with base metals such as zinc is the increasing importance of inventories held at the Shanghai Futures Exchange (SHFE). Traders should monitor the change in zinc inventories at both exchanges for clues about zinc supply and prices.

US Demand

Construction and infrastructure represent a very large percentage of galvanized steel demand.

The United States has not invested in major infrastructure projects in decades. If the government earmarks funding for new infrastructure projects, the price for steel could move significantly higher. This would likely create increased demand for zinc and result in higher prices.

A strong US economy also increases demand for automobiles. Ultimately, the transportation sector is a very reliable barometer for galvanized steel and zinc demand.

Vehicle Assembly Line via Pexels
Vehicle Assembly Line via Pexels

Input Prices

Zinc occurs in ore bodies, and breaking down these ore bodies to extract the element expends energy. Mining and refining zinc requires ample supplies of coal, electricity and crude oil.

These costs can have a big effect on primary production. Similarly, the costs of scrap metal can impact the price of secondary production.

Further Reading

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