Japan: Zinc quotations exceed JPY 500,000 in CY'22, first time in 15 years

The electrolytic zinc quotation, which is a guide for domestic relative trading, exceeded in Japan by JPY 500,000 ($4,347) in CY'22 for the first time in 15 years and has remained at a high level since CY'07. This year, it registered at JPY 460,000-478,000 (($3,999-4,155) until the end of Feb'22.

Mitsui Mining & Smelting Co., Ltd. announced on the 4 Mar'22 to raise zinc prices by JPY 39,000-517,000 ($339-4,494) with the average price in March rising above JPY 511,700 ($4,448), exceeding JPY 500,000 ($4,347). The three-month zinc futures price on the London Metal Exchange (LME), the benchmark for the zinc market, rose due to supply concerns caused by tensions in Ukraine. It reached $4,000 on 3 Mar'22 for the first time in 15 years.

The electrolytic zinc quotation reached JPY 400,000 ($3,477) in Oct'21 for the first time in three years - the highest level since 2007, and has remained at a high level ever since.

In addition, it was 49% higher than the same month of the previous year, indicating a significant increase in zinc prices over the past year.

The LME zinc market rose last fall owing to rising supply concerns from production cuts at major smelters as a result of soaring electricity prices in the Europe. On top of this, the tension in Ukraine raised concerns about natural gas supplies from Russia, as well as the high energy requirements for zinc and the resulting supply concerns, which supported the high market price.

On the third day of Mar'22, the overall non-ferrous metals market was affected by higher crude oil futures and European natural gas prices, as well as receding fears of sharp monetary tightening following the US Federal Reserve's (FRB) congressional testimony.

Outlook

Given the growing tension in Ukraine, zinc supply concerns, including logistical disruptions is most likely to increase. The high three-month futures price on the same day was $4,028, $118 higher than the previous day.

Note: This insight has been published in accordance with an article exchange agreement between SteelMint and Japan Metal Daily.