Approval of the proposed Xstrata-Glencore merger would give the new company 16 percent control of global zinc ore production and more than 60 percent of global refined zinc sales. Management must convince the European Commission that its deal does not violate antitrust thresholds.
A brief overview of zinc price developments, supply and demand, and significant market movers
Zinc mining investment is starting to grow in light of impending shortages in years to come. While dominant zinc-producing markets like Peru and Canada will continue their lead roles, other markets are also coming along for the ride.
Rising zinc prices and processing fees are the first signs of a zinc market supply crunch. While surpluses will remain for sometime, many companies are already preparing for shortages.
A proposed merger between Glencore and Xstrata has brought a lot of attention to zinc. Unfortunately, zinc's moment in the spotlight also comes at a time of rising mined and refined supply which has pushed spot and three month zinc prices lower.
As zinc markets prepare for supply shortages in coming years, some producers are bringing new production online in 2012. But despite zinc prices reaching average historic levels, short term zinc prices and demand are expected to slide in 2012 before they hit their stride in 2013.
2011 has been a rather disappointing year for the zinc market. With the malaise of declining global economic growth, coupled with increasing zinc mine and production supply, zinc prices are not likely to see price support salvation until mid-2012. However, continued exploration and junior field development will likely be a predominant trend leading forward.
Zinc mining juniors are preparing to fill the gap between growing demand and declining production.
Recent applications of nanoengineering have made zinc oxide an ideal material to convert heat into electricity and increase energy efficiency of electronic and industrial technologies.
As the biggest consumer of refined zinc, news of China’s declining industrial output has pushed zinc prices lower on fears of the consequences for the global economic recovery.
Get our independent commentary on zinc trends and companies delivered to your inbox.
