LONDON (Reuters) – “Zinc – Where’s the metal?” The question was posed by analysts at ICBC Standard Bank in a research note published in February last year.
One year on and the question is more relevant than ever. London Metal Exchange (LME) zinc stocks totalled 98,000 tonnes in the middle of February 2019. They now stand at 50,550 tonnes. This isn’t how the zinc story was supposed to play out.
Citi was proclaiming “zinc’s last hurrah” in February last year, the bank advising “producers to sell in to temporary tightness since our base case expects the market will loosen in (the second half of the year)”.
The consensus was that a surge in mine production would translate into a surplus of refined metal over 2019. A rebuild in visible inventory was a matter of time.
The outright zinc price has retreated a long way from its cycle peak close to $3,600 in early 2018, last trading at $2,370 per tonne, but there has been no sign of surplus metal making its way to LME warehouses and there has been no relief from the tightness gripping the London market.