Zinc at two-week high aided by hopes of deeper output cuts in Europe

Among base metals, Zinc is an outperformer, trading at a two-week high amid the Street expectations of deeper cuts in output in much of Europe as the region grapples with an energy crisis in the wake of supply constraints owing to the Russia-Ukraine war. There are shortages and the inventories have continued to decline as well.

On output cuts, Nyrstar has shut the zinc smelter in the Netherlands and that has been shut since the first of September. Trafigura has also cut up to nearly 50 percent of capacity in at least three European smelters there. There are already output cuts by Auby smelter, this is in France, and then Glencore Portovesme smelter as well. So the output cuts have been consistent and have seen deeper cuts coming in, especially from Europe.

Besides, China is also imposing stringent power restrictions with zinc output from the country in August seeing a decline of 2.8 percent on a month-on-month basis and a near 9 percent dip on a year-on-year basis. Between January and September, the Chinese zinc output is estimated to have declined by 2.6 percent.