Zinc hit a four month low of $3,135 a tonne on Thursday, down more than 12% from its decade high achieved mid-February.
Rising fears about trade protectionism have taken the shine off most base metals but zinc’s bearish outlook has more to do with new supply; and lots of it.
The metal, mainly used to galvanize steel, has more than doubled since hitting multi-year lows in January 2016 after the shutdown of major mines including Australia’s Century, the Lisheen mine in Ireland and top producer Glencore’s depleted Brunswick and Perseverance mines in Canada.
Just to throw fuel on the fire the Swiss giant curtailed production at its operating mines in Australia. But in December Glencore said it would restart its Lady Loretta mine while keeping its total output steady at under 1.1m tonnes.
More ominously CEO Ivan Glasenberg said the company had about 500kt of zinc capacity that would be restarted at “the right point in the cycle.”
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