LONDON – It’s been a brutal couple of days for the zinc price. London Metal Exchange (LME) three-month metal slumped by $100 per tonne to $2,250 on Tuesday and the sell-off has extended to $2,210 today.
The five-year high of $2,418 achieved at the start of this month is starting to look a long way off, the slide coinciding with news of producers planning to increase output of mined metal. Given that zinc’s stellar run this year has been predicated on a tightness in raw material supply, does this amount to a rewrite of the galvanizing metal’s bull narrative?
Or is it nothing more than a technical rewind of over-exuberance? Tuesday’s price rout took place the day after two apparently bearish bits of news hit the wires. The first came from Abraham Chahuan, general manager of the Antamina mine in Peru. He told a news conference that the mine will likely double its zinc output to between 340,000 and 360,000 tonnes next year.
The second came from Vedanta Resources, which said that mined output at its Hindustan Zinc subsidiary had jumped 51 percent in the third quarter relative to the second with production over the next half-year expected to be “significantly higher” still.
It’s precisely the sort of news that would appear to undermine the zinc bull narrative of a shortfall in mined metal. The only thing is that neither is really “news”.
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