Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Trevali, a global base-metal mining company, foresees demand to outweigh supply as global economic activity accelerates from Q3 (July-September), it announced in its Q2 earnings report. 


Trevali’s previously-issued 2020 annual guidance was suspended on March 26 due to COVID-19’s impact on demand and prices for zinc and lead. The company issued updated production and cost guidance for the remainder of 2020. For H2, total zinc production is projected between 148-163mn lbs and lead is forecast between 8-10mn lbs. For FY20, zinc projection is at 290-320mn lbs and lead is at 17-21mn lbs. 


Production of lead and zinc

Zinc production declined 20pc to 164.7mn lbs in H1 (Jan-June) from the prior year. Production declined 38pc to 65.8mn lbs in Q2 (April-June) from the year prior and down 34pc from the prior quarter. 


Lead production fell 33pc to 15.4mn lbs in H1 compared to previous year. Production in Q2 dipped to 4.7mn lbs, down 56pc from prior quarter and 59pc lower from prior year. Perkoa, Rosh Pinah and Santander are all producing at full capacity with COVID-19 prevention measures in place, said the company. 


Going forward

The rapid rise of COVID-19 cases in Asia resulted in extended shutdowns of smelters and Chinese mine production. In Q1, Chinese smelting production and economic activity increased, while mine production was curbed in Europe and the Americas. 


In Q2, mining resumed but it was only in June when majority of mines restarted production. As a result, the concentrate market surplus that was forecast at the beginning of 2020 will now go into deficit, according to Trevali. The significant curtailment of global mine production in H1, should support zinc prices over the course of the year as Trevali hoped demand will outweigh supply after global economic activity accelerates.



The company’s operating loss was recorded at $5.7mn for Q2 on a decline in the zinc price (quarterly average of $0.89/lb) and reduced sales volumes of 72mn lbs of payable zinc. This was a result of lower production at Caribou as it was placed on care and maintenance, COVID-19 related disruptions to production at Santander and lower zinc grades at Perkoa and Rosh Pinah.

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