COLUMN-Glencore changes the debate, but can it change the zinc market? – by Andy Home (Reuters U.S. – October 15, 2015)

http://www.reuters.com/

Oct 15 (Reuters) – Everyone’s talking about Glencore. The Swiss trading and mining giant is the hot topic of conversation in the myriad meetings and cocktail parties taking place in London for LME Week.

And, Glencore executives will be pleased to note, this isn’t speculation as to whether the company is about to go bust. That particular panic seems to have passed for now after a flurry of announcements intended to shore up its balance sheet, most recently the proposed sale of two copper mines.

Rather, it was Glencore’s announcement on Friday of massive cuts to its zinc and lead production portfolio that has been exercising the minds of the thousands of metal executives meeting in London this week.

The London zinc price went on a super-charged rally on the news, exploding from its opening at $1,701 per tonne to $1,875 in a matter of hours. As with last month’s announcement of 400,000 tonnes of copper cutbacks, the timing was exquisite, catching off guard a market that had been grinding steadily lower for months under the weight of relentless short selling.

The collective mood is still decidedly downbeat as the market attempts to get to grips with the implications of a Chinese slowdown but Glencore has successfully changed the nature of the debate.

The question now is whether its cuts can change the fundamentals of the zinc market.

TIPPING THE ZINC BALANCE

Make no mistake. Glencore’s 500,000 tonnes of annualised zinc cuts are both huge, amounting to around four percent of global supply, and unprecedented. No-one can remember a producer taking such decisive action in any previous downturn.

For the rest of this article, click here: http://www.reuters.com/article/2015/10/15/glencore-zinc-ahome-idUSL8N12F2H720151015

Comments are closed.