Majors Funding New Zinc Mines on Expectation of Deficit

Reuters reported that as China’s demand for zinc increases and expectations grow that the metal will fall into deficit, major companies, including Glencore Xstrata plc (LSE:GLEN) and Nyrstar NV (EBR:NYR), are funding new mines.

As quoted in the market news:

London Metal Exchange zinc prices have tumbled as much as 15 percent this year, one of the worst performers among base metals, but the outlook is turning, thanks in part to a growing appetite for the metal among China’s steel producers.

Within five years prices could almost double if the pace of Chinese demand growth continues.

Already the world’s largest consumer, China still needs more zinc to lift rust-proofing of its steel closer to international levels. Typically, steel manufactured in China contains only a quarter of the zinc found in western steel.

Chinese car makers need to buy more steel coated with zinc, known as galvanising, to make their vehicles more rust resistant.

Click here to read the full Reuters report.