World’s Best Commodity Brings No Joy for Second-Biggest Producer

  • Top refined-zinc maker fails to gain from metal’s jump in 2016
  • Delays to Nyrstar’s sales plans hurts shares: ABN’s Ngotho

Zinc’s top-ranking performance among commodities in 2016 is failing to benefit investors in the world’s second-biggest producer of the metal.

Shares of Nyrstar NV, Europe’s largest refined-zinc company, are down 29 percent in Brussels this year even as the price of the metal rose 45 percent. In contrast, Glencore Plc, the world’s top miner of the resource, almost doubled in value in London. Vedanta, another producer, is up 80 percent.

Nyrstar, which on Wednesday locked in prices for some of its output to protect against the risk of a weaker market, has been trying to sell assets to cut debt.

“You would expect with the recent rally in zinc prices there would’ve been more support for the share price,” Philip Ngotho, an analyst at ABN Amro Bank NV in Amsterdam, said by phone. “But it’s very much company specific.”

Delays to Nyrstar’s plans to sell mines, and concern over a ramp-up at its Port Pirie plant after the discovery of asbestos have hurt the shares, according to Ngotho, who has a hold rating on the company. Disappointing spot-treatment charges, or the discounts that Nyrstar obtains when purchasing zinc concentrate, are also unwelcome, he said.

The company rose 0.8 percent to 6.523 euros by 10:39 a.m. in Brussels trading.

Zinc for delivery in three months on the London Metal Exchange gained 0.8 percent to $2,328.50 a metric ton after earlier touching a 15-month high of $2,338.50. It’s the best performer this year on the Bloomberg Commodity Index of returns on 22 raw materials.

— With assistance by Agnieszka De Sousa

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE