FX.co ★ Zinc Futures Fall on Possible EU Tariffs

Zinc futures experienced a decline to approximately $2,890 on September 26, following a recent peak at a nearly six-month high earlier in the month. This shift occurred amidst news that the European Commission intends to impose significant tariffs—ranging between 25% and 50%—on Chinese steel imports and related products in the upcoming weeks. The objective of this decision is to restrict steel imports and bolster the European domestic market, addressing global overcapacity issues that have been compressing profit margins and deterring investment in decarbonization initiatives within the continent's steel industry. Zinc, primarily used to coat and protect steel from corrosion, faces potential drops in demand if these tariffs lead to a reduction in Chinese steel production. Consequently, a decreased output of steel from China, due to diminished access to the European market, could reduce its zinc consumption, thereby putting downward pressure on zinc prices.