LONDON, Aug 16 Zinc’s sharp rally and looming market deficit has fed speculation that major producers such as Glencore may reverse output cuts, but analysts caution that is unlikely to happen soon.
Only when stocks of concentrate and metal sink to levels where higher prices can be sustained will large producers look at restarting capacity, they say. Benchmark zinc on the London Metal Exchange has climbed nearly 60 percent from January’s multi-year lows to around $2,300 a tonne, its highest since May 2015.
Many zinc mines have been shut or mothballed over the past couple of years, but prices did not really take off until this year when deficit expectations intensified with the closure of the Century mine in Australia and Lisheen in Ireland.
Glencore’s decision last year to slash 500,000 tonnes of annual zinc production set the ball rolling. Its zinc output in the first half of this year fell 31 percent to 506,500 tonnes from the same period last year.
“We don’t think Glencore will reactivate in response to prices,” said Graham Deller, analyst at CRU. “They will wait until the concentrate market runs out of spare material.”
For the rest of this article, click here: http://uk.reuters.com/article/metals-zinc-glencore-idUKL8N1AW3K7