An excess in the global zinc market may be replaced by a shortage

As the International Lead and Zinc Study Group (ILZSG) recently reported in its report, in the first half of this year, the balance in the global zinc market was reduced to an excess of 134 thousand tons or 2.0% of global consumption, which increased by only 0.2% compared to the same period a year ago.
The price of zinc on the London Metal Exchange (LME) in early September fell to less than $2,200 per ton, which is the lowest level in the last three years and indicates an unfavorable market environment.

Nevertheless, Reuters analyst Andy Home believes that the situation on the global zinc market does not justify such a deep drop in prices, and an oversupply may be replaced by a shortage.

In particular, he notes an unforeseen decline in metal production due to the closure of the Russian Elektrozink plant and a major accident at the American Mooresboro plant with a capacity of 155 thousand tons per year in April. According to American Zinc Recycling Corp, which owns this plant, its return to operation will take place only in the first quarter of 2020. In August, Teck Resources was forced to shut down the Trail plant in Canada for 4-5 months, which will lead to the loss of another 20-30 thousand tons of zinc.

On the other hand, there has been an increase in zinc consumption in China in recent months. In July, the volume of production of this metal increased by 17% compared to the same month last year. In addition, China imported 375 thousand tons of zinc in seven months, 20% more than in January-July 2018.

All these factors may change the balance in the global refined zinc market by the end of this year.

11.09.2019