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

Canada-based Trevali Mining has reported a robust outlook for zinc. The company has revised its 2021 guidance for zinc and lead production. Zinc production could reach 330-355mn lbs from 330-360mn lbs, while lead production guidance was lowered to 40-44mn lbs from 45-50mn lbs. 


The Canadian miner said factors like infrastructural spending initiatives, electrification of transportation, decarbonization of energy sources, and technological improvements could boost the price of zinc. 


The State Reserve Bureau of China sold reserves of zinc parcels among other metals, to limit a price rise. This move, coupled with the strengthening of the US dollar, has caused a slump in zinc prices. 


The International Lead and Zinc Study Group reported, Chinese State Reserves Bureau holds around 250,000mt of refined zinc, accumulated between late 2009 and early 2013. 


Fundamentals support for zinc prices will continue in the medium term, said Trevali. The company states demand could outweigh supply as global economic activity recovers, and infrastructural spending and green energy initiatives begin to make an impact. 


By the end of the June quarter, the LME exchange inventories decreased to 256,000mt from 270,500mt on March 31. 


Lower stocks and strong demand for zinc continued to increase spot metal premiums and spot zinc premiums which are currently on an uptrend. In North-Western Europe, spot metal premiums and zinc premiums are at present, in the range of $120-130/mt from $100-110/mt in May. In the US, spot premiums are in the higher range of $193-198/mt, while those in Southeast Asia are around $110/mt. 


Production and sales

 In the June quarter, payable zinc production increased by 33pc to 87.3mn lbs from the prior-year quarter and by 17pc from the previous quarter. In H1 (Jan-June) production declined by 2pc to 162.2mn lbs from H1 2020. 


Lead payable production in Q2 jumped 106pc from the prior-year period and 64pc from the previous quarter to 9.7mn lbs. Similarly, lead payable production increased by 1pc to 15.6mn lbs in H1 as compared to H1 2020. 


Zinc payable sales in Q2 increased by 20pc to 72.5mn lbs from last year and 19pc from Q1. In H1, zinc payable sales were at 158.9mn lbs. 



 Revenues increased by 41pc in Q2 from the prior quarter and stood at $101.1mn, driven by supplementary contribution from Caribou unit and an increase in the average quarterly LME zinc price at $1.32/lb. Revenues increased by 137pc as compared to Q2 2020. Net income in Q2 was $3,877mn from a net loss of $19,381mn in the same quarter last year.

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