The recent market overview of zinc

2021-10-27

Nyrstar cut production, triggering a jump in zinc prices. The reason for the reduction is the surge in electricity prices caused by the energy crisis in Europe. According to our calculation, the increase in electricity costs may push up the average zinc production cost (C1 cash cost) this year of the 90 lane place line moves up to 2150 USD/ ton, the 75 lane place line moves up to 1800 USD/ton, the 50 lane place line moves up to 1650 USD/ton. If energy prices continue to rise, the cost line will move up further in 2022.

Compared with the zinc mine production reduction in 2016, the production reduction this time has some differences. It is mainly reflected in different market environment, different industry profits and uncertain production reduction cycle. According to existing conditions, the global refined zinc supply will be short by 90,000 tons in the fourth quarter, including 60,000 tons overseas and 30,000 tons domestically. In 2022, the annual supply gap could widen to 600,000 tonnes. If the production cut is reflected in the market, the large gap between supply and demand makes zinc prices are expected to start a trend up to hit a new record high.