Metals: Zinc surges 5% as power prices prompt Nyrstar to cut output

Nyrstar NV

13/10/2021 17:04

* Aluminium price touches highest since July 2008
    * Nyrstar to cut output by up to half at European zinc
smelters
    * GRAPHIC-2021 asset returns: http://tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Eric Onstad
    LONDON, Oct 13 (Reuters) - Zinc and aluminium prices stormed
to fresh peaks on Wednesday as a power crisis sparked cuts in
smelter output.
    The metal's price in Shanghai touched its highest in nearly
14 years, while the price in London jumped more than 5% to its
strongest in more than 3-1/2 years after Nyrstar  NYR.BR  said
it will cut production by up to 50% at its three European zinc
smelters because of soaring electricity costs.  urn:newsml:reuters.com:*:nL1N2R90G2
    Electricity prices have reached record highs in recent
weeks, driven by power shortages in Asia and Europe, with
China's crisis expected to last through to the end of the year
and crimp growth in the world's second-largest economy.
 urn:newsml:reuters.com:*:nL1N2R80UQ 
    An analyst cautioned, however, that soaring power prices are
also likely to hit industrial output, denting metals demand. 
    "We should not forget that not only the primary metals
producers are being hit by the power crunch, but also the metals
manufacturers, the ones further down the value chain," said
Daniel Briesemann at Commerzbank in Frankfurt.
    "At the moment, everyone apparently wants to see higher
prices, so they are focusing on just one side of the equation."
    Benchmark zinc  CMZN3  on the London Metal Exchange (LME)
vaulted 5.4% to $3,440 a tonne, its strongest since March 2018,
before paring gains to $3,405 by 1600 GMT.
    The most-traded November zinc contract on the Shanghai
Futures Exchange  SZNcv1  closed 1.5% up at 24,000 yuan
($3,721.68) a tonne, its highest since November 2007.
    The three Nyrstar smelters have combined annual output of
about 690,000 tonnes, Morgan Stanley said in a note.
    "Chinese (zinc) smelters have cut production for several
times in past months, and we have revised down the production
forecast by 80,000 tonnes compared with our previous forecast in
early 2021," said CRU analyst Dina Yu in Beijing.
        
    * A weaker dollar index  .DXY , down 0.4%, also supported
metals prices.
    * Aluminium, the most power-intensive base metal, was
unchanged on the LME  CMAL3  at $3,068 a tonne after hitting its
highest since July 2008 at $3,118.50. 
    * LME copper  CMCU3  climbed 2.2% to $9,673 a tonne and lead
 CMPB3  advanced 1.7% to $2,248 while nickel  CMNI3  dipped by
0.4% to $18,905 and tin  CMSN3  fell 0.2% to $36,400.
    * For the top stories in metals and other news, click       
 TOP/MTL  or  MET/L      

($1 = 6.4487 yuan)

 (Additional reporting by Mai Nguyen in Hanoi
Editing by Louise Heavens and David Goodman)
 ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO;
 Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))
 
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