LONDON, June 29 (Reuters) – Will China’s zinc smelters cut production?If they make good on a proposal to take a collective 10 percent hit, it would remove at least 400,000 tonnes of metal from the market on an annualised basis.
The news has halted the slide in zinc prices, both in London and Shanghai, though it may have been little more than narrative wrapping for an overdue correction.
The London Metal Exchange (LME) three-month zinc price is this morning trading at $2,875 a tonne, still close to Tuesday’s 10-month low of $2,815 and a long way from February’s peak of $3,595.50. That tells you the market isn’t that impressed either.
As is often the case with such pronouncements from China’s producer associations, there is no tangible detail on actual implementation. Perhaps more significant than the future promise is that China’s zinc smelters are sufficiently worried about the market to have held Thursday’s meeting in the first place.
Zinc’s price narrative may have flipped from one of raw materials shortfall to one of coming surplus, but the reality for the world’s largest producer of refined metal remains one of a stressed supply chain.