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Published on : Jul 21, 2017

Rise in global zinc prices could rise this year to levels that were not seen in a decade as demand for the metal continues to massively exceed production volumes owing to mine output disruptions in a number of key zinc producing countries, according to Asia’s largest producer Hindustan Zinc Ltd.

On the London Metal Exchange, prices of zinc could jump as high as US$3,000 per metric ton in the next few quarters, according to Sunil Duggal, chief executive officer of the Vedanta Ltd. unit in Udaipur, Rajasthan. The last time that zinc prices had reached such as high was in 2007.

Zinc, which finds use in the galvanization of steel, has gained significant traction in the sector of base metals, gaining nearly 22% rise in price in the past year, chiefly owing to the massive reductions in production capacities by Glencore Plc and other manufacturers. Vast increase in costs and a rise in output helped Hindustan Zinc in gaining increased strength in the global market. In the three months till June, the company saw a whopping 81% rise in net incomes to US$292 mn.

Even as the prices increased by 60% in 2016, making zinc the best performing industrial metal that year, mining companies in China have been struggling to constitute to the reducing global output, which hit a bad patch after several large mines in Ireland and Australia were closed and Glencore suspended a part of its production capability in 2015. Lack of clarity regarding Glencore’s stand about restarting production operations in its stalled facility are also supporting price rise in the global zinc market.