Zinc CBS June 2021 — Supply concerns add to price volatility in June

The London Metal Exchange three-month, or LME 3M, zinc prices rose to $3,083 per tonne June 2 on a wave of concern around Chinese refined output. The LME 3M zinc prices have averaged $3,028/t in June to date, 1.6% higher than the May average of $2,981/t.

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• The LME 3M zinc price reached a multiyear high of $3,083/t June 2 and has averaged $3,028/t in June to date, up 1.6% on the May average of $2,981/t.
• The National Food and Strategic Reserves Administration of China announced June 16 it will be releasing reserves of zinc to help keep costs to Chinese manufacturers down. This, combined with inflation fears in the U.S., has weighed on zinc prices since June 15.
• The first four months of 2021 have seen Chinese zinc mine output grow 8.1% year over year.
• Power rationing in China's Yunnan region has dampened Chinese mine and refined zinc output in the second quarter. We forecast Chinese mine and refined output to reach 4.6 million tonnes and 6.9 Mt respectively in 2021.
• Key purchasing managers' indexes in the U.S. and Europe point to strong recovery sentiment, with values recorded at 61.2 and 63.1 respectively in May.
• We forecast the refined zinc market to be in a 105,000-tonne surplus in 2021 and the LME 3M price to average $2,852/t.
• Vedanta has announced a 6.5 billion Namibian dollar conversion on the currently closed 150,000-tonne Skorpion zinc refinery, but the time scale for the project is still unknown.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.