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2021
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Global giants suddenly cut production by 50%, copper, aluminum and zinc collective surge, "crisis" is approaching, how much impact?
Recently, Nyrstar, the world's largest zinc smelter, announced that European refineries would cut production by up to 50%, stimulating global zinc prices to soar. London zinc prices rose by more than 20% a week, directly setting a record for the largest weekly increase in history and a 14-year high since 2007.
Source: Mining Exchange
Recently, Nyrstar, the world's largest zinc smelter, announced that European refineries would cut production by up to 50%, stimulating global zinc prices to soar. London zinc prices rose by more than 20% a week, directly setting a record for the largest weekly increase in history and a 14-year high since 2007.
Obviously, the most direct trigger for this round of soaring zinc prices comes from supply-side production cuts, with the world's most important zinc producer Nyrstar three zinc smelters in Europe to cut production by up to 50%. According to Citi's estimates, the global zinc market is expected to be roughly balanced before the production cuts, but the Nyrstar production cuts may reduce the annual supply of zinc by about 2.5 percent.
According to agency data, Europe will produce 2.41 million tons of refined zinc in 2020. In addition to Nyrstar, Glencore will produce 800000 tons of zinc, 300000 tons of Tektronix and 500000 tons of Boliden smelting capacity. If energy prices remain high in the fourth quarter, other major factories may still reduce production in the future, and zinc prices are expected to continue to rise.
At home, zinc is also facing a reduction in production. The zinc smelting industry in Hunan, Yunnan, Guangxi and other regions has the problem of reducing production. The production limit is 20%-40%. According to the statistics of the National Bureau of Statistics, the zinc production in Hunan, Yunnan and Guangxi accounts for 42% of the total national output. about.
Among the global zinc importing countries in 2020, China will import the largest amount, with an annual import of 2.9 million tons, accounting for 40% of the total demand. If the price of zinc continues to soar, it will have a greater impact on China's domestic price system.
In addition to zinc, the prices of copper and aluminum have also opened up a skyrocketing pattern. Len copper's in stock premium reached its highest level in nearly a decade as global inventories dwindled. For the world's largest copper trader, the group's confidence in the outlook for copper prices remains undiminished as global inventories are getting lower and lower, and copper supplies have been more affected so far as the number of energy-intensive smelters is reduced, despite the growing risk that the energy crisis will hit manufacturers.
Goldman Sachs pointed out that the global power shortage has exacerbated the shortage of copper resources, and there is a strong positive correlation between coal supply and the sharp decline in copper stocks. In addition, copper mining has entered a multi-quarter stagnation phase, and since the beginning of this year, mining has declined slightly in a row. Goldman Sachs expects global mineral supply growth to slow in the second half of this year and not pick up until the second half of 2022.
In the context of rising prices of commodities and consumer goods, the global inflation rate is still facing upward pressure, which also poses a severe test for the monetary policies of various countries. The International Monetary Fund has issued a stern warning about inflation risks, arguing that the global economy is entering an inflationary risk phase. The International Monetary Fund also specifically named the Federal Reserve, calling on the central banks of developed economies, including the Federal Reserve, to be ready to tighten monetary policy at any time.
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