The zinc market has slipped gently into deficit after six years of rising inventories

John Robertson


The zinc market has slipped gently into deficit after six years of rising inventories. According to the International Lead Zinc Study Group, consumption outpaced production by 17,000 tonnes in the first quarter of 2014. This is not enough to make a meaningful impact on the 2.1 million tonnes of accumulated metal in stockpiles at the end of 2013. When zinc metal prices reached their peak, inventories were only 550,000 tonnes. Since 2000, zinc supplies have been growing at a 3.1% annual rate. A sharp slowing has been expected. Despite Canadian mine closures in 2013 accounting for 315,000 tonnes of production, global mine output in the quarter was 3.0% higher than a year earlier. Teck has already announced it will reopen a mine in anticipation of closures elsewhere making it tougher for the market to rebalance without an unexpected surge in growth.

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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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