LONDON, Aug 30 (Reuters) – It’s been nearly a year since Glencore announced it was mothballing half a million tonnes of mined zinc capacity. At the time there was a good degree of scepticism in the zinc market that the company would make good on its promise.
But it did and the London Metal Exchange (LME) zinc price hasn’t looked back since. Three-month metal is currently trading just above $2,300 per tonne, compared with $1,700 at the time of the announcement back in October 2015.
Indeed, zinc has been the hottest base metal in town this year with investment managers jumping on the band-wagon. Which makes the question of how long Glencore will hold its cuts ever more pressing. Just don’t expect an answer yet.
Several analysts tried to pin Glencore Chief Executive Ivan Glasenberg down on the company’s H1 conference call but no-one got anywhere other than various iterations of his opening statement that the capacity will return when “we believe supply and demand justifies bringing it back”.
So how are those supply and demand indicators looking right now?
BULLISH SIGNALS PROLIFERATE
There is no doubt that the zinc concentrates market is tightening. Of course it was already tightening before Glencore made its cutback announcement thanks to long-anticipated closures of big mines such as Century in Australia and Lisheen in Ireland.
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