Author: Paul Ploumis
18 Mar 2015 Last updated at 02:05:21 GMT
SEATTLE (Scrap Monster): The most recent statistics released by the International Lead and Zinc Study Group (ILZSG) indicates that the global zinc market ended in a small surplus during the initial month of the New Year. The surplus amounted to 1,900 tons during the month, slightly higher when compared with the global surplus of 1,800 tons reported during Dec ’14. However, the group foresees several headwinds for the metal going forward.
Zinc for three-month delivery on LME has fallen steadily since September last year from levels of above $2,400 per tonne to $2,000 per tonne levels. The strength in dollar and uncertainty surrounding Chinese economic growth has had heavy bearing on zinc along with other LME-traded metals. According to available data, LME zinc stocks have fallen significantly during the year. The stocks are down by 157,175 tonnes so far this year, the highest fall by any LME-traded metal during this period.
MMG-the operator of Australian Century Mines has reduced the zinc guidance for the year. The operator is likely to close down its operations at the mine. Similar closures elsewhere in the world may lead to supply shortage, which in turn may propel zinc prices to higher levels. However, the capacity of Chinese mills and mines to respond to higher prices is still a matter of concern.
The global zinc mine production had registered a growth of 1.8% in 2014. In the world outside China, zinc production declined by 0.7%, whereas China witnessed a mine production growth of 6.5%. The refined metal supply dropped by 1% in the world outside China, but had registered robust growth of 14% in China.