The Deepening Deficit That Makes Zinc One of 2016’s Top Bets
The Deepening Deficit That Makes Zinc One of 2016’s Top Bets
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Global mine supply seen set for ‘record shortage’ this year
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China’s refined zinc output to drop for first time since ‘12
Some are not so bullish. It may take longer than expected for the emerging concentrates supply crunch to feed through to refined-metal markets, analysts from Citigroup Inc. including David Wilson said in an e-mailed note. Zinc demand has remained muted, and total inventory including metal that’s held off-exchange may amount to between 2.5 million tons and 3.5 million tons, or as much as 13 weeks consumption, according to the bank. This is “likely to have a dampening effect on prices,” the analysts wrote.
The raw material shortage may mean Chinese smelters fulfill part of a pledge they made in November to cut output by 500,000 tons in 2016 from about 6 million tons last year. That would reverse an increase of 1 percent in the first four months, according to Goldman Sachs estimates.
An official at China’s biggest zinc processor, Zhuzhou Smelter Group Co., who asked not to be identified, was unable to comment immediately because the company was still assessing output. A decline in production would be the first since 2012, statistics bureau data show.