Zinc’s dramatic surge to the highest in a decade might boost profits in the short term but isn’t all good news for producers, according to Vedanta Resources Plc.
Buyers are struggling to make money at current levels after prices more than doubled since the start of 2016, Deshnee Naidoo, the chief executive officer of the company’s Vedanta Zinc International unit, said in an interview.
“The whole market is out of whack,” Naidoo said in Johannesburg on Thursday. “In the short term it’s a good price, but it’s not a sustainable price. There needs to be an incentive price for galvanizers, alloy producers, smelters.”
The market has tightened following supply cutbacks and tougher Chinese curbs on mining. Glencore Plc, the top producer, has curtailed output at mines in Australia and Kazakhstan, and made a further wager on zinc on Tuesday when it announced plans to increase its stake in Peru’s Volcan Cia Minera SAA.
Zinc hit $3,308.75 a metric ton on Wednesday, the highest since 2007, and traded at $3,296.50 on Friday. Vedanta, which controls top-three producer Hindustan Zinc Ltd., is happy to benefit from the high prices in the short term, Naidoo said.
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