Increased supply pushes zinc prices up to their highest level in more than four years

THERE ARE SIGNS OF TIGHTENING SUPPLY, WITH ZINC PRICES RISING TO THEIR HIGHEST LEVEL IN MORE THAN FOUR YEARS, CONTINUING THE UPWARD TREND OF MONTHS. IN RECENT TIMES, MULTIPLE FACTORS HAVE CONTRIBUTED TO HIGH ZINC PRICES, RANGING FROM THE MIDDLE EAST WAR, WHICH HAMPERED THE SUPPLY OF IRANIAN ORES TO THE DISRUPTION OF PRODUCTION IN SEVERAL MINES. ZINC PRICES RECORDED A FIFTH CONSECUTIVE MONTH OF INCREASE IN AUGUST, WITH A CUMULATIVE INCREASE OF 27 PER CENT IN THE PRICE OF ZINC FUTURES SINCE THIS YEAR, SIGNIFICANTLY AHEAD OF COPPER AND ALUMINIUM, WHICH ARE ALSO SERIOUSLY DISTURBED BY THE SUPPLY SIDE. DESPITE A RECENT SMALL INCREASE IN ZINC STOCKS AT THE LONDON METAL EXCHANGE (LME) WAREHOUSE, THEY REMAIN BELOW 100,000 TONS AND REMAIN RELATIVELY LOW BY HISTORICAL STANDARDS. MARKET SUPPLY CONSTRAINTS WERE ALSO REFLECTED IN A SIGNIFICANT DECLINE IN SMELTER PROCESSING FEES, WHICH FELL FURTHER IN AUGUST TO $117.50 PER TON AT THE END OF THE MONTH. THE DECLINE IN PROCESSING FEES SUGGESTS THAT THE SHORTAGE OF ORES IS FORCING SMELTERS TO ACCEPT MORE STRINGENT CONDITIONS FROM MINERS, ALTHOUGH SMELTERS CAN USUALLY COMPENSATE FOR SOME OF THE LOSSES BY SELLING BY-PRODUCTS。