FX.co ★ Zinc Approaches YTD High

Zinc futures in the UK have reached $3,000 per tonne, approaching the year-to-date peak of $3,050 observed earlier in October. This increase is attributed to ongoing disruptions in smelting operations that have constrained the supply of refined zinc. According to the International Lead and Zinc Study Group, refined zinc production has decreased by over 2% this year, despite a 6.3% increase in mined output. This discrepancy aligns with output reductions from smelters in Kazakhstan and Japan, where the closure of the significant Toho Zinc Annaka facility has added pressure. Furthermore, treatment charges for zinc have increased to $87.5 per tonne, a notable shift from negative values reported at the end of last year, based on data from the Shanghai Metals Market. As a result, stocks at the London Metal Exchange (LME) have plummeted to below 37.3 thousand tonnes, a stark contrast to the 230.5 thousand tonnes recorded at the beginning of the year. This inventory level represents less than one day of global demand, leading to the most pronounced cash to 3-month contract spread seen since at least 1997.