Zinc: TC falls reflect future tightness

摘要

The fundamentals of the market for zinc concentrate in 2016 Q3 have not been quite as strong as wewere anticipating. However, even though the market may have not quite drawn down all of its excess,TCs for recent spot and tender business have been bid down to levels that would ordinarily be too lowfor smelters to generate satisfactory revenues. However, smelters are prepared to accept such lowTCs when they believe zinc prices will continue rising and they are not obliged to hedge. At the sametime, traders have also been prepared to win tenders with offers of very low TCs in anticipation offurther increases in zinc prices. This is the backdrop to the start of annual contact negotiations.