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

Vancouver headquartered Trevali believes the outlook for zinc continues to improve as commodity markets have now entered early stages of recovery from the impact of COVID-19 in 2020. New mine operating practices are being adopted to manage the health risks posed by the pandemic.


The company lists out several reasons for a positive zinc outlook, starting with the strengthening of global manufacturing. Trevali has observed the flash manufacturing Purchasing Managers Index (PMI) for several major economies which is a basic economic health indicator. 


The Eurozone recorded April flash manufacturing PMI at a new high of 63.3, up from March, while Japan’s flash manufacturing PMI stood at 53.3. Manufacturing companies in China also reported an improvement since March as production and new orders continued to expand, however, at lower rates. China’s export business has grown stronger as external economies continue to recover. 


In Q1, LME zinc prices have averaged $1.25/lb and continue to trend up from the pandemic lows of $0.81/lb in March 2020. Trevali expects mine disruptions to support zinc prices in the medium term as demand will overtake supply amid a speedy recovery of economies. 


Operational Performance

In Q1, Trevali mined 549,555mt, down 28pc from the prior-year period and 3pc lower than the previous quarter. Zinc head grades in Q1 improved by 1pc while lead head grades fell 15pc compared to the year prior quarter. 


Recovery rates have improved in Q1 with zinc up 1pc and lead up 3pc compared to Q1 2020. Production of payable zinc was reported at 74.8mn lb, down 24pc from the preceding year and 1pc higher from the prior quarter. Lead payable production in Q1 stood at 5.9mn lb, down 45pc from Q1 2020 and3 30pc lower from the December quarter. 


Zinc payable sales in Q1 fell 20pc to 72.5mn lb and lead payable sales dipped significantly by 76pc to 1.4mn lb. Compared to the prior quarter, zinc sales are down 3pc, while lead sales a whopping 84pc lower. 


The company revealed their 2021 guidance while reporting their Q4 and year-end results; the company maintains its zinc production guidance at 330-360mn lb and expects it to be at the lower end of 2021 guidance due to slower than expected ramp-up. 



Revenues in Q1, jumped 39pc to $72mn on the back of a 29pc increase in zinc, lead and silver prices, but were partially offset by the dip in sales volumes. Revenues rose 6pc from the prior quarter owing to an increase in zinc prices and a reduction in benchmark zinc concentrate smelting and refining charges as compared to the prior quarter. Payable sales volumes were consistent in Q1, says the company. 

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