Zinc prices jumped on Tuesday after one of Europe’s biggest smelters said it would halt production indefinitely, as shock waves from the energy crisis ripple through the region’s industrial base.
Nyrstar, a Trafigura-controlled zinc producer, said in a statement on Tuesday that its Budel smelter in the Netherlands would be closed for “care and maintenance” from September 1 until further notice.
News of the shutdown sent prices for the metal, which is used for rustproofing steel, soaring to the highest level since early June on Tuesday, gaining 2.8% to $3,698 a tonne.
The Budel smelter is capable of producing 315,000 tonnes of zinc per year, around 2% of global production, but the site has been operating at reduced capacity since the last three months of last year.
Earlier this month Glencore, another of the world’s largest zinc producers, warned that its zinc business was the most affected by rising energy costs in Europe, creating a ‘challenging’ environment for its merger operations.
Citibank estimated that zinc production in Europe was down 8% in the first half of the year compared to the second half of 2021, adding that it expects further cuts in smelter output later this year. .
“Unlike copper and nickel, smelter cuts should shield zinc prices from the worst of weak consumption,” bank analysts said.
Zinc stocks at the London Metal Exchange have fallen 70% since last year as traders dipped into warehouses after smelters cut output.
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