Zinc Advances for First Time This Week Amid Tightening Supplyby
Global production declines for a second month, ILZSG says
Lead consumption exceeds production in January, group says
Zinc advanced in London for the first time this week amid signs of tightening supply.
World refined zinc production fell to 1.12 million metric tons in January, from 1.14 million in December, the International Lead and Zinc Study Group said in a report Wednesday. That’s the second straight monthly decline. Inventories at warehouses tracked by the London Metal Exchange fell for a seventh session to 452,525 metric tons, the lowest since Jan. 18.
Zinc has rallied 9.6 percent this year amid speculation that the market will be in deficit after producers including Glencore Plc curbed output. Consumption will exceed supply by 350,000 metric tons, according to the average estimate of analysts surveyed by Bloomberg News in February. That would be the largest deficit since 2005. Prices slid 26 percent in 2015 as China’s economy grew at the weakest pace in more than a generation.
“As production continues to fall, that just makes the market a little bit tighter,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “That should be positive for zinc.”
Zinc for delivery in three months gained 1.3 percent to $1,764 a ton by 2:28 p.m. on the LME. Prices fell 3.4 percent in the previous two sessions.
- Lead gained 0.2 percent after the International Lead and Zinc Study Group said consumption exceeded production in January.
- Nickel and copper also gained in London, while tin and aluminum fell.