THE zinc market is heading for a much greater supply deficit than previously forecast owing to a squeeze on raw materials, said Reuters on Thursday.
Citing data from the International Lead and Zinc Study Group, the newswire said a 164,000 ton deficit would materialise in the zinc market this year compared to a previous forecast of 56,000 tons.
Mine production is now expected to fall for a third consecutive year and smelter treatment terms, a good indicator of raw material availability, have turned negative, said Reuters. China, which hosts the world’s largest smelter network, is feeling the margin pinch and national production of refined zinc is sliding at an accelerating rate, it said.
The Shanghai Metal Market (SMM) assesses the spot market at a negative $40 per ton, highlighting the mismatch between smelter demand and raw material availability, said Reuters.
China’s refined metal output was dropping even before some of the country’s top producers met in August to agree on curbing run-rates, said Reuters. The pace of decline has accelerated in the last couple of months.
SMM estimates zinc metal output was down by 7.6% year-on-year in August and expects the gap to have widened to 10.4% in September.
