FX.co ★ Zinc Tests 11-Month High

Zinc futures surged to approximately $3,100 per tonne in November, reaching their highest levels since early this year due to supply constraints and strong demand projections. Despite a 6.3% rise in mined zinc output, refined production has declined by over 2% this year. This decline aligns with production limitations faced by smelters in Kazakhstan and Japan, particularly following the significant closure of Japan’s Toho Zinc Annaka plant. In response, treatment charges for zinc have increased to about $100 per tonne, a significant shift from being negative $115 at the end of last year, as confirmed by private surveys. This situation has led to a plunge in LME stocks, now down to 35,000 tonnes from 230,500 tonnes at the year's start. This level is equivalent to less than a single day of global demand, causing the most pronounced cash to 3-month contract spread observed since at least 1997. Base metals have been generally supported by expectations that ongoing electrification efforts and investments in data centers will sustain the consumption of industrial inputs despite global economic challenges.