Zinc inventories have started coming down on account of tightness of supplies in spot markets. The markets of Zinc have been in surplus since 2006 but the closure of some of the major mines in North America and Peru in 2013 is expected to squeeze the surplus from the markets. Zinc is majorly used in galvanization of steel and as an alloying metal. ILZSG report last month showed that the global zinc markets were in surplus of 265000 tonnes in 2012.
LME Zinc inventories have already started to come down in London exchanges and it is expected that the trend will continue in coming days. LME inventories have declined by 2% this year to 1198300 tonnes till 4 March 2013. The recent projections of 7.5% growth in China are a welcome sign for the metal.
Having said that, China is reducing its reliance on zinc concentrate imports and is banking on Zinc production within the country. The treatment and refining charges are expected to double to $ 110 per tonne from $ 45 per tonne on 2012, if market sources are to be believed. The rise in treatment charges indicates oversupply in the markets.
LME Zinc three month forwards were down by $ 4 per tonne at $ 2004 per tonne. MCX Zinc futures were trading at Rs 109 per kg, down 0.6%. The prices have slipped from Rs 119 per kg down 8.4% from 13 Feb 2013.
Source by Commodity Insights
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