Zinc prices to slide further on oversupply
Written on September 2, 2008
With sliding zinc prices taking their toll on miners, they can be forgiven for asking when the market will turn upwards — not any time soon, according to market experts.
The industry has seen mine closures and output cuts as energy, labor and equipment costs rise while zinc prices drop.
And the pain will continue — the question is whether weak demand and global oversupply will keep prices falling into 2010, or whether the market will turn around next year.
“We would need very, very, very significant production losses to bring the market back to balance” in 2009, said Giles Lloyd of industry consultants CRU Group.
“Some producers are now realizing that they were being a bit hopeful thinking that the market could turn in 2010.”
The metal, mainly used to galvanize steel, is one of the worst performers in the metals complex this year free credit report online. In August it dropped to its lowest level since November 2005 and is now trading around $1,745 a tonne, down almost 25 percent this year.
It’s no wonder prices have dropped.
Zinc stocks at the LME have jumped 80 percent this year to 160,000 tonnes, and a Reuters survey of analysts showed an expected surplus of about 281,250 tonnes this year, growing to 328,758 tonnes in 2009.
Filed in: economics.