mine supply growth saw spot terms rise quickly during 2022. While spot terms have been under downward pressure in recent weeks due to European smelter restarts and some problems at the mines, favouring the miners’ side of negotiations, smelters insist that concentrate availability is very good and point to mine supply growth being set to exceed smelter consumption growth in the next few years. Recent news that certain Yunnan zinc smelters have been ordered to curtail output due to power supply problems in the province also aid the smelters’ cause.
In other discussions, we found zinc metal demand levels more stable than feared, with acknowledgement of some softness in Europe but more activity in North America. That said, with a number of smelter production and production quality problems in the North American region last year, consumers were motivated to ensure they were covered for the next few months, inferring that spot refined zinc activity will be very thin in the first half. Chunky imports of Korean and Australian metal late last year have already arrested the premium rally and US Midwest has begun to descend towards 30c/lb having peaked at close to 40c/lb in summer last year. With freight rates having collapsed, there is a clear arb for material to travel from Asia to north America and Europe for their high premium levels and this is beginning to be seen. With customers already well covered, we tend to think there will be a continuation of the slide in premiums throughout the year in both continents.
On the macro side, delegates acknowledged headwinds for the DM markets given inflation levels and rates, but hopes expressed towards a Chinese rebound were encouraged by Wednesday’s release of a raft of more positive February data. Most notably the NBS manufacturing PMI rose to 52.6 from 50.1 during the previous month, a strong beat over expectations of around 50.5 and the highest print since April 2012. With most analysts at IZA sharing expectations of coming surpluses for the zinc market on rising supply, the shift in China’s prospects is supportive for the consensus 2023 outlook of balance for refined metal. LME prices rallied strongly today with zinc the outperformer, up 3.3% DoD to ~$3,130/t.
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20 November 2025