China, a major user of zinc, is experiencing a slowdown in demand and the economy, which is reflected in the current downward trend in zinc prices, as was demonstrated by yesterday’s 1.07% drop to settle at 207.6. Setbacks in the Russian zinc market, particularly the production delay at the Ozernoye mine as a result of sanctions and facility damage from fire, further exacerbated this decline.
The mine, which had initially planned to begin production in 2023, is now expected to begin in the third quarter of 2024 at the latest, with a complete capacity ramp-up scheduled until 2025. Amidst Nyrstar’s suspension of Budel smelting operations in the Netherlands owing to high energy costs, such delays heighten worries about the world’s zinc supply.
According to current estimates, annual global zinc supplies are estimated to be approximately 14 million tonnes. The discount for cash over three-month zinc contracts on the LME indicates a noticeable lack of anxiety, although market sentiment is still muted, with sporadic surges reflecting supply concerns.
Increased zinc supplies to LME-registered warehouses, up nearly 200% since November to 199,125 tonnes, highlight the current surpluses and reflect this stance. A 5.88% increase in open interest to close at 5290 and a -2.25 rupee price loss indicate that the market is technically showing signs of fresh selling.
