Tight concentrate supply and rising competition for mined ores have pushed zinc smelting charges lower. According to media reports, Korea Zinc, in an annual deal with Canada’s Teck Resources Ltd, has agreed to a 40% decline in zinc smelting fees. Teck has signed to supply smelters with zinc concentrates from its Red Dog mine in Alaska, with processing fees set at $165/t, down from $274/t seen last year. This is the lowest level since 2021. Teck’s deals serve as a benchmark for the rest of the industry and a sharp decline in processing charges could put a strain on the profit margins of zinc smelters globally.
SHFE weekly inventories for all base metals rose over the last week, according to the latest data from the exchange. Copper stocks increased by 1,621 tonnes to 291,849 tonnes, the highest since April 2020. Meanwhile, aluminium inventories rose by 2,634 tonnes (+1.2% WoW) to 219,474 tonnes (the highest since May 2023), while nickel and lead stocks increased by 8.2% WoW and 5.2% WoW respectively.
The latest LME COTR report shows that investors increased their net bullish position for copper by 7,891 lots to 88,426 lots for the week ending 29 March – this is the seventh consecutive week of increases amid expectations of potential output cuts in China. A similar move has been seen in aluminium, with speculators increasing their net bullish bets by 1,587 lots to 124,487 lots over the last reporting week.
Gold prices hit yet another record high yesterday with spot gold breaking above $2,300/oz for the first time. The strength in the market came after the US ISM services index came in lower than expected, whilst comments from Fed Chair Jerome Powell stating that recent strong macro data does not materially change the overall picture when it comes to monetary policy, would have also helped. The market is still largely of the expectation that the Fed will start cutting interest rates in June. However, these expectations may change after tomorrow’s US jobs report.
