Producers are bullish on zinc prices due to a lack of raw materials and increased demand from China, speakers said at the MB Zinc conference here.
"We are bullish on zinc, which has outperformed other metals. With the mine closures of Century and Lisheen finally happening and Glencore has cut production of 500,000 tonnes of raw materials, the lack of concentrates is providing enough space for zinc to be the best performer this year," Carlos Henriques, managing director of Votorantim Metais, said.
LME zinc jumped to $1,958 on April 21, its highest since July 2015, after bottoming out at a six-year low of $1,444 on January 12. It traded recently at $1,852 per tonne on Tuesday.
Tight supply is reflected in changes in treatment charges (TCs) for zinc concentrates, which have piled pressure on smelters.
"Zinc was first two metals to recover and we believe that zinc is the market to watch as there is a shortness of supply. We must not ignore the volatility in the market as well, which for zinc prices will be strong for the medium-to-long term," Vedanta Resources CEO Deshnee Naidoo said.
China's demand growth rate is expected to be around 3-3.5 percent this year due to urbanisation and industrialisation, which could also support zinc prices despite a slower growth rate compared with few years ago, she added.
Growth in the automotive sector could lift demand for zinc, which is was widely used in galvanising steel sheet. Production of vehicles in China could increase 23 percent by 2022 from 23.6 million vehicles produced in 2015, Nicolas Rouet, head of marketing & commercial controlling at ArcelorMittal Automotive Europe, said.
China has lifted its imports of refined metals during the past few months - imports of refined zinc rose 88.29 percent year-on-year to 76,998 tonnes in March while the first-quarter total of 180,985 tonnes was up 121.03 percent on the first three months of 2015.
(Edited by Mark Shaw)