LME zinc prices soar as stocks drop to record lows

Three-month prices of zinc on the London Metal Exchange (LME) soared on diminishing inventory levels which have hit a record low in 2022, reveals data complied by SteelMint.

Zinc LME 3-month prices touched $4,222/tonne today, up by 2% from last week's closing level of $4152/t.

But, importantly, inventory levels fell by around 36% since the beginning of the year and weekly stocks dropped by around 9%. LME-registered warehouse recorded stocks of 199,325 t at the beginning of the year. Frequent falls led to an inventory of 127,675t today.
Geo-political tensions between the two largest nations in Europe have led to considerable sanctions on Russia which are affecting the entire supply chain of oil and gas, and specifically base metals. These factors are leading to hike in gas and fuel prices and causing lack of production capacity utilisation across Europe.

High energy prices have forced some zinc smelters in Europe to curtail production and Russia's demand for payment for gas in roubles has raised fears of supply shortages or even higher prices. Base metals supply shortage is urging traders to procure zinc from Asia to execute the existing contracts and they expect near-term prices to stay firm.

Further, primary zinc producers in India, like Hindustan Zinc Limited (HZL) - a subsidiary of Vedanta Limited - registered a production growth of 8% to 0.78 mnt in financial year 2021-22 (FY22), y-o-y, as per company reports. Increased production was supported by better availability of concentrates. HZL accounts for 78% of the zinc market in India. SteelMint's assessment for zinc special high-grade ingots is at INR 363,000/t on 8 April, 2022, exy-Delhi, excluding GST.