Zinc, this year’s best performing metal, has the potential to extend gains to the highest level since 2011 because of a shortfall in ore production, assuming that Glencore Plc doesn’t restart idled mines, according to Japan’s biggest producer.
Prices could advance to $2,500 a metric ton by March because of “super tight” ore supply after companies cut output, Osamu Saito, general manager of Mitsui Mining & Smelting Co.’s metals sales group, said in an interview in Tokyo. “Even if Glencore ends production cuts, supply will continue to trail demand, though the feeling of shortage will ease somewhat.”
The company joins Goldman Sachs Group Inc., Deutsche Bank AG and Citigroup Inc. in highlighting the bullish outlook. Goldman Sachs predicts that zinc will reach $2,500 in three months, while Citigroup says it will average $2,445 in 2017.
The metal used to galvanize steel has already risen more than its peers on the London Metal Exchange this year and traded at $2,260 on Monday at 10:29 a.m. in London.
Mitsui Mining is maintaining its estimate for a global deficit this year of 440,000 tons, the widest in over a decade. About 1 million tons will be lost this year through Glencore’s cuts and closures of depleted mines in Australia and Ireland, Saito said Thursday.
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