Zinc demand is benefiting from multi-sector structural growth that partially offsets the expected supply-driven surplus of 2026-2027. Galvanizing — zinc's primary use, accounting for approximately 60% of global consumption — is directly tied to infrastructure spending, data center construction, and renewable energy installations.
Global data center investment has grown approximately 25% year-on-year in 2025, with projections for continued expansion through 2027. Each data center requires galvanized steel structural frames, cable trays, cooling tower components, and grounding systems — all zinc-intensive applications.
Defense spending in NATO countries has risen sharply, driving demand for galvanized steel in military construction, armored vehicle production, and ammunition (brass contains 30-35% zinc). US defense spending authorization reached record levels for FY2026, with infrastructure and munitions procurement increasing.
Chinese zinc demand remains stable at +2-3% growth, supported by the property sector's stabilization after the prolonged downturn and infrastructure stimulus. China accounts for approximately 50% of global zinc consumption, so even moderate growth provides a meaningful floor under prices.
The bank consensus is that these demand drivers prevent the expected surplus from translating into a price crash. Morgan Stanley forecasts zinc averaging $2,900/t in 2026 — above pre-2024 levels — rather than returning to the $2,000-2,500/t range that would reflect pure surplus economics.
Demand diversification provides a floor under zinc prices even as supply increases. Galvanizing demand from data center and infrastructure construction is structural, not cyclical. Lock in H2 2026 volumes at current levels if supply chain continuity is critical. The surplus risk is real but the downside is limited to approximately $2,900-3,000/t — not a crash scenario.