Commerzbank Sees Zinc at $2,000 per MT in 2014

Platts reported that Commerzbank AG analysts believe that, contrary to the prevailing viewpoint, production from new zinc projects expected to soon come online may not offset “the large existing mines that are depleting.” That’s because the companies developing these new projects ultimately may not be able to bring them into production due to the current weak pricing environment.

As a result, the firm expects zinc supply to tighten and prices to rise be supported at an average of $2,000 per metric ton (MT) in 2014.

As quoted in the market news:

‘Like with copper, we believe that the International Lead and Zinc Study Group (ILZSG) may have pitched its estimate of a 115,000-ton supply surplus on the global zinc market next year too high,’ Commerzbank said, ‘given that a number of large-scale zinc mines are nearing or have indeed reached their end-of-life.’

For example, the report said, Canada’s Brunswick and Perseverance zinc mines stopped producing recently, the Lasheen mine in Ireland will wind down next year, and the world’s top-producing zinc mine, Australia’s 500,000 mt Century mine, will run dry in 2016.

But new projects to replace this production may simply be unaffordable, Commerzbank said, and the new projects started recently are smaller-scale and still years away from production.

Click here to read the full Platts report.