Market sentiment wins in price tug-of-war

Zinc Investing News reports zinc prices improved over the past two weeks.

European zinc producers are preparing to make further production cuts to combat a growing supply glut and weak prices. Output has already been slashed by 10 per cent, or 1 million tonnes worldwide, with more than a quarter coming from European producers. The production cuts to date are causing sharp drops in spot treatment and refining charges in Asia and are also responsible for decline in this year’s benchmark terms, which are now being settled at much more favourable terms for miners. However, in the grand scheme the cuts have done little to stabilize metal prices. Spot treatment charges for zinc concentrates shipped to China for smelting have plummeted to $110-$120 tonne from $190 a tonne at the start of 2009. Further production cuts are likely to occur among the producers in Europe where a strong Euro was providing little cushion for suppliers, given the hefty declines in U.S. dollar zinc prices.

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