Market participants are saying that an already tight zinc concentrate market has become even tighter. Global smelters and refineries have been revising up production drawing on as much concentrate as they could get and now port inventory of zinc concentrates is down significantly by the end of July. Given the low availability of concentrate there is an expectation that smelters/refineries will be forced to take maintenance shutdowns. This should translate to a tighter refined zinc metal market. The market has been expecting a refined metal deficit and it looks like things are setting up nicely to visibly show it. Interesting the market shrugged off the LME zinc inventory spike in New Orleans +29,800t which probably was hidden stocks getting flushed out. Right now, it is really the zinc concentrate tightness that is exciting the market in our view. TC=Treatment charges by smelters.
Total global zinc stocks are now at 782kt which is +4.3% YTD and +4.0% YoY.
Days of Consumption = 19.4
… And Where Do You Get Your Zinc On? Check out our Zinc Sensitivities in the Table below… Our Metals Research Team showing what a 10% and 20% move in Zinc prices would do to our numbers for Teck, Lundin, Hudbay, Trevali. We assume zinc prices will average $1.10/Ib in 2017e.
Source: Scotiabank Metals Research