Zinc - shining bright

Metals have been on the downward run for some time now. Most metals, ferrous as well as non-ferrous are facing a situation of glut, with oversupply and lower prices being the norm. But what we learn now is that there is one metal which is buckling the trend – no glut and zooming prices. That’s zinc!

YoY, Zinc prices have gone up over 6% on the London Metal Exchange (LME) to $2.146/tonne – the only metal which is showing a gain on the LME. The Bloomberg Industrial Metal Subindex is down 15% over the last 9 months and 10% YoY. Yet, zinc is up. Why?

Many zinc mines across the world are tapped out. China’s MMG zinc mine in Australia is tapped out and this mine alone used to take care of 4% of the world demand. And now, with supply going short, China is hurting, trying to find a substitute. Morgan Stanley has put out a report stating that by 2017, more than 1.2 million metric tonnes of annual mined supply with go out of production, And this is worrisome as this is more than the annual need of USA. BNP Paribas and Goldman Sachs expect prices to rise further for this ubiquitous metal which is used right from automobiles to plumbing. Demand has outstripped supply the most in nine years since 2014 and these fund houses say that in current calendar year, deficit is set ot double.

And yes, Vedanta Resources is also planning to shut its Lisheen mine in Ireland, cutting supply by 175,000 tonnes.