April 29, 2022

Total world zinc supplies could fall into deficit this year and drive prices higher, as Glencore expects their production to drop by approximately 107,800 mt, from 1.1178 million mt in 2021 to 1.01 million mt this year, according to their First Quarter 2022 Production Report released yesterday. Late last year, the International Lead and Zinc Study Group, an UN-founded trade organization, predicted a global supply surplus of 44,000 metric tons in 2022. Glencore cites “persistent challenges in ramping up processing capabilities at Kazzinc’s Zhairem operation” for the drop in zinc production.  

Consumers who are concerned about their zinc input costs should consider financial swaps or purchasing call options. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (4/29/2022)

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