LONDON (Reuters) – “The most critical issue facing the zinc market is the performance of zinc smelters and Chinese zinc smelters in particular.” A potential smelter bottleneck topped research house Wood Mackenzie’s January zinc list of “Things to look for in 2019”.
And so it has proved. The world’s zinc mines lifted production by 1.9% in the first half of this year, according to the latest statistical bulletin from the International Lead and Zinc Study Group.
However, world refined metal production fell by 0.4% over the same period. The surprise is that it’s not Chinese smelters that have been having problems, but rather those in the rest of the world.
This continuing supply-chain dysfunction is holding the zinc price in uneasy limbo between a bear narrative of supply surplus and smelters’ collective struggle to make that surplus tangible in the form of refined metal.
Skorpion Zinc, operator of a mine and refinery in Namibia, is the latest producer to join the lengthening casualty list. Skorpion, owned by India’s Vedanta, will close the refinery from early November through the end of February 2020.