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Mineweb reported that optimism about zinc is increasing on the back of “a looming shortage in zinc supply.” The base metal was one of the best performers of the first quarter of 2016.
Mineweb reported that optimism about zinc is increasing on the back of “a looming shortage in zinc supply.” The base metal was one of the best performers of the first quarter of 2016.
As quoted in the market news:
This optimism comes as the closure of key mines as well the curtailment in production at others, is expected to lessen stock levels and lead to a rebalance between supply and demand.
After shutting down in 2015, both Vedanta Resources’ Lisheen Mine in Ireland and MMG’s Century Mine in Australia have recently made their final shipments of the metal. In late 2015, Nyrstar, the world’s largest zinc producer, said it would consider reducing its zinc concentrate output by a further 400 000t per annum as it suspended operations in the United States, Canada and Mexico took around 150 000t of concentrate off the market. Commodities giant Glencore also cut a third of its annual zinc output, taking 500 000t off the market.
Although most of the production cuts were announced late last year, their impact appears to have already had an effect. Initial data from the International Lead and Zinc Study Group (ILZSG) shows that the global market for refined zinc recorded a surplus of 183 000t in the first half of 2015 before swinging to a deficit of 60 000t in the second half. Total inventories, including those held in LME, Shanghai Futures Exchange, and Chinese State Reserve Bureau warehouses, fell by 55 000t to 1501kt over the course of that year.
According to Macquarie Research zinc mine output will fall by about 3.3% in 2016, while JPM mine depletion and cost-related closures is to lessen output by as much as 4.5%. Global demand is expected to increase by 1%. A slight improvement from ILZSG data saw overall demand increase by 0.7% in 2015.