NEGOTIATOR’S TAKE: Upwards pressure on Zinc makes it difficult for galvanized steel buyers |
08.13.16 – Pacific Northwest –
Caught between an updraft by dwindling supply and the gravity of slwoing growth in global deman, zinc prices seem to have reached a cruising altitute above US$1 per pound.
Australian and Irish mine closures
Recent closures of two large zinc mines – Century in Australia and Lisheen in Ireland – wiped out more than 600,000 metric tons of the world’s annual supply of the galvanizing metal. Analysts expected these looming supply deficits to send zinc prices soaring well above US$1/lb in 2015. While the metal did climb to US$1.10/lb in May, lackluster global economic growth muting the demand for commodities in general instead dragged the price to seven-year lows.
With zinc prices falling below US70 cents/lb. late in 2015, Glencore PLC slowed its output, removing another 500,000 metric tons from the global supply.
“The main reason for the reduction is to preserve the value of Glencore’s reserves in the ground at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources,” the Switzerland-based company explained.
Scotiabank sites 8 % drop in zinc supply
In the July 26 edition of its commodity prices index, Scotiabank said the 8 percent drop in zinc supply resulting from the two large mine closures and Glencore’s curtailment sets zinc apart from its contemporaries.
“The base metals narrative remains split between demand-driven stories surrounding beleaguered contenders like copper and the supply-centric focus in outperforming metals like zinc and, more recently, nickel,” the Canadian bank penned in the report.
Adding, “Zinc remains the bullish story within the base metals group.”
This tale of zinc prices rising 41 percent since the beginning of the year is a good read for Teck Resources Ltd., operator of the Red Dog zinc mine in Northwest Alaska, and Hecla Mining Company, which enjoys considerable by-product credits from zinc recovered at its Greens Creek silver mine on the state’s Southeast Panhandle.
SOURCE: Mining News
ARTICLE AUTHOR: Shane Lasley (Mining News Publisher) | Email Shane at: email@example.com