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November 2017 | Base Metals


Zinc: Mine supply response going strong


While zinc prices consolidate below their recent highs, we review the key takeaways of the zinc miners’ reporting season in this week’s analysis. Although our sample set of around 70% of global production outside China fell short of Q3 guidance, they did still manage an impressive 4.5% year-on-year increase. And while this warrants a downgrade to our annual forecast, Dugald River is now on line and we are looking for an increase in global zinc mine supply of no less than 445,000 tonnes in 2018. This should rebalance the market and cap the upside to prices.

Key takeaways from Q3 miners’ reporting season
Results from Compañía Minera last week complete our round-up of the Q3 reporting season from our sample set of zinc mining majors. While it is clear that several producers are succeeding in their goal of boosting output to capitalize on the favourable price/TC environment, factors such as lower-than-expected recovery rates and unplanned disruptions are acting as a drag on other producers. Highlights among companies expanding production were dominated by Teck:

Red Dog: Teck reported a strong Q3 at its giant Red Dog mine. Output increased 3% year-on-year to 152,400 tonnes,...

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