All Eyes on China For 2013 Zinc Prices

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Continued from Part One.

Zinc is mined in more than 50 countries and is produced as metal and as compounds in about 40 countries — China, Peru, Australia, India and the US are the five largest producers of zinc in the world.

The US has always been one of the largest consumers of zinc, but since the dip in the country’s economy, and the Western world’s economy in general, China has been consistently fighting for the top slot as not only being one of the world’s largest importers of zinc concentrate to meet its own internal zinc consumption needs, but also by its more than 30 percent share of global zinc mine production (2011).

In 2011, China was the saving grace in an otherwise lackluster global zinc market — will it be so in 2013?

Zinc prices at the London Metals Exchange (LME) had ranged between $2,400 and $2,800 per ton during the first half of that year, but weakened significantly during the second half to end the year at $1,827 per ton. By year-end, refined zinc stocks at the LME and Shanghai Futures Exchange warehouses had increased by 172,326 tons to 1,184,486 tons overall.

today's metal prices - MetalMiner IndXIn 2012, the story was even worse with LME prices of zinc hitting a low of $1,785, and trading below the $2,000 mark on average. But analysts forecast that zinc prices in the short term may go past the US $2,028 on the LME in the first quarter of 2013.

There’s only one damp spot in an otherwise overall optimistic picture for zinc for 2013.

Last year’s surplus stocks could come in the way of a fuller recovery. A report by Platts said growth in China’s production of zinc concentrate may increase by 10-15 percent this year, compared with a 21 percent year-on-year jump in 2012.

The reasons for this were adequate domestic concentrate supply coupled with an anticipated under-utilization of smelter capacities.

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