CRU: Zinc’s Price is Not Far from the Substitution Danger Zone

By CRU Senior Analyst Helen O’Cleary from CRU’s Zinc Monitor.

Zinc use has been optimized on an ongoing basis for decades as technological advances lead to lower raw materials usage and the development of higher-performing alloys with a lower zinc content. This is particularly true of the galvanizing industry, which accounts for around 60% of total zinc demand. While it is difficult to calculate exactly how much demand is lost to optimization due to the typically slow, long-term nature of the changes, there are circumstances in which a more pronounced switch away from zinc occurs; for example, to lower-cost materials in times of high prices or to lighter materials in the case of the automotive sector. Zinc’s superior technical properties mean it is difficult to substitute in many applications, but ongoing optimization and economization will continue to chip away at the amount of zinc consumed. In this Insight we look at the potential threats to zinc demand from price-induced and regulatory-driven substitution.