Zinc price highest since March as energy crunch threatens smelters

San Juan de Nieva zinc operations. Credit: Glencore.

The zinc price rose the most in almost five months on Thursday after Glencore warned that Europe’s energy crisis poses a substantial threat to supply.

Glencore has already suspended production at one of its zinc smelters in Europe, leading to a sharp drop in its metal output this year, and on Thursday it disclosed that its other smelters in the region are barely turning a profit.

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The company produced 350,900 tonnes of zinc in H1, 47,500 tonnes (12%) lower than H1 2021, mainly relating to the suspension of Portovesme’s zinc line in Q4 2021, due to high European power prices.

Zinc production at Glencore's European smelters has slumped this year.

While risks to industrial-metals demand are mounting, Europe’s power crisis is also weighing heavily on the supply outlook, the company said.

Zinc surged as much as 8.5%, the biggest intraday gain since March 8, finishing the day up 4.4% at $3,420, the strongest since June 28.

Click here for an interactive zinc price chart.

“On the supply side, the current energy supply and price environment pose a significant threat, as Europe accounts for around 30% of ex-China metal production,” Glencore said in its half-year earnings report.

“Most fundamental indicators continue to point to tight market conditions, particularly in the West.”

(With files from Reuters and Bloomberg)