SHANGHAI, Apr 20 (SMM) - Trevali announced that its Perkoa zinc mine in Burkina Faso, West Africa, has now suspended operations following a flooding accident. Heavy rainfall last Saturday triggered flooding. At present, the mine staff have been evacuated, and rescue work is still underway, and eight miners may have been missing underground.
Trevali produced 161,700 mt of zinc concentrates in zinc content in 2021. And it owns 90% of the Perkoa mine, whose production in 2021 was about 73,000 mt in zinc content.
However, the closure of the zinc mine was not immediately reflected in the performance of futures prices. The current futures prices are still driven by the shutdown of smelters caused by overseas energy problems. Although the price of natural gas in Europe has recently fallen, zinc inventory in Europe remains low. A short squeeze is likely to occur in Europe.
In terms of fundamentals of Chinese zinc market, the decline in the SHFE/LME zinc price ratio has discouraged smelters from purchasing imported ore. In Inner Mongolia, due to the slow resumption of production at mines in Manzhouli, the shortage of domestic zinc ore intensified. The overall domestic consumption is weak amid the pandemic, but the export window is briefly opened. High zinc price led to thin transaction in the spot market. Trades were mostly contributed by traders. Overseas zinc market may face short squeeze, which will support zinc prices at highs.
As of April 20, the average spot price of SMM 0# zinc ingot was 28,780 yuan/mt, an increase of 15.07% from the low on March 16.