FX.co ★ Zinc Rises to 3-Year High

In January, zinc futures in the UK surged to $3,360 per tonne, marking a three-year peak. This increase aligns with the upward trend seen across base metals, driven by supply constraints. Despite a 6.3% rise in mined zinc output last year, refined zinc production was expected to decline by 2%, according to recent data. This trend is largely attributed to production cuts at smelters in Kazakhstan and Japan, with the notable shutdown of Japan's Toho Zinc Annaka facility exerting significant pressure. Additionally, zinc treatment charges ascended to approximately $100 per ton, a sharp contrast to the negative $115 observed at the end of the previous year, as indicated by private surveys. Consequently, London Metal Exchange (LME) zinc stocks plunged to 110 thousand tonnes from 230.5 thousand tonnes at the beginning of last year, following a near depletion of both on-warrant and off-warrant stocks by the start of the fourth quarter. Broadly, base metals have gained support from expectations that initiatives in electrification and datacenter investments will sustain the demand for industrial inputs, despite challenges to global economic growth.