LONDON, Nov 3 (Reuters) – Prices of zinc and lead have given up nearly all their gains since Glencore shocked the market with output cuts, as investors realised other producers were happy to fill the supply gap.
That means the market is unlikely to see shortages of zinc and the price rally next year that many bulls had hoped for.
The latest set-back in zinc prices follows disappointment this year as the well-flagged closures of big mines that had run out of ore failed to create shortages as expected amid large inventories.
The benchmark zinc price on the London Metal Exchange (LME) surged 13 percent over two days in the aftermath of Glencore’s announcements on slashing output.
Commodity trader and producer Glencore, the world’s largest miner of zinc ore, said on Oct. 9 it would cut 500,000 tonnes of its zinc production or 4 percent of global supply to help support prices.
Some investors hoped other producers would follow suit, but a few days after Glencore’s statement, Indian rival Vedanta Resources said it had no plans to trim its zinc output since its mines had low costs.
In September, Vedanta said it planned to produce 1 million tonnes of refined zinc and lead in the current 2015/16 fiscal year to the end of March, up 15 percent from 869,069 tonnes in the previous year.
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