Zinc market braces for Chinese smelter output rise

According to Mining News Pro - Deficits have driven LME stocks to record lows and pushed zinc, used to galvanize steel, to a nine-month high of $2,958 on April 1.

But the supply situation is expected to change rapidly after Chinese treatment charges soared to $240 a tonne from a low of $12.50 at the start of 2018. Smelters are likely to seize the opportunity to make money by ramping up production in the second quarter, said Deutsche Bank analyst Nick Snowdon.

LME STOCKS/SPREAD: Headline stocks in LME-registered warehouses, at 52,550 tonnes, are down from 129,000 tonnes at the start of the year. The premium for cash zinc over the three-month contract has shot to $74.50 from close to zero in early February, suggesting a shortage of nearby material. SHFE STOCKS: However, stockpiles in warehouses monitored by the Shanghai Futures Exchange (ShFE), at 108,772 tonnes, are up from about 20,000 tonnes at the start of the year.

MINE SUPPLY: Global mine supply of zinc is expected to rise 6.4 percent this year to 13.87 million tonnes, according to the International Lead and Zinc Study Group (ILZSG).

REFINED SUPPLY: But higher mine production has been slow to feed through to the refined market, with the ILZSG showing a 384,000 tonne deficit in 2018 and another shortfall in January. GLOBAL GROWTH: The IMF cut its forecast for world economic growth this year to 3.3 percent from 3.5 percent and said the chances of further cuts are high. TRADE WAR: U.S. President Donald Trump threatened to impose tariffs on $11 billion worth of European Union products, opening a new front in his trade war. LAS BAMBAS: An indigenous community voted to suspend its two-month road blockade of Las Bambas, a large Peruvian copper mine, for two days until the government visits the region on Thursday. ALUMINA: Emirates Global Aluminium said its Al Taweelah alumina refinery in Abu Dhabi had commenced operation. It is expected to produce 2 million tonnes of alumina a year once fully operational. OTHER METALS: LME copper ended 0.4 percent down at $6,464 a tonne, aluminium fell 0.8 percent to $1,864, lead slipped 1.1 percent to $1,953.50 and tin eased by 0.1 percent to $20,850. Nickel did not trade but was bid 0.1 percent lower at $13,230.