Zinc prices will fall moderately as the market turns to a surplus for the first time in five years, according to Japan’s top smelter.
The metal used in construction and automobiles will likely average $2,300 a ton in the year starting April 1, according to Kenji Sugawara, general manager of Mitsui Mining & Smelting Co.’s metal sales group. That’s slightly below last year’s average of $2,507 and the recently traded $2,404 on the London Metal Exchange.
The market is returning to a surplus in 2020 after four years of deficits as smelters from India to North America ramp up output in response to rising ore supplies. In China, which consumes more than 40% of the world’s metal, output growth will be limited due to strict environmental regulations, halting dramatic declines in prices, Sugawara said Monday in an interview in Tokyo.
Mitsui Mining & Smelting cut the premium it charges overseas customers in Asia for the first time in four years in 2020, reflecting higher supplies. The company cut premiums by 5% to 8% this year, compared with 2019, Sugawara said. It has yet to start talks with domestic buyers for annual contracts starting April 1.
Global production of refined zinc will probably surpass demand by 192,000 tons in 2020, reversing from an estimated deficit of 178,000 tons in 2019, the International Lead and Zinc Study Group said in October.
(By Masumi Suga, with assistance from Ichiro Suzuki)