Copper gains 2% while zinc prices rise sharply due to production cuts

Zinc prices climbed to a new 14-year high on Thursday after rising energy prices triggered production cuts at Nyrstar, a major producer of the metal used to galvanize steel.

At 0954 GMT, benchmark zinc on the London Metal Exchange (LME) was up 3.7% at US $ 3,528 per tonne, the highest since July 2007. The metal was in its sixth consecutive session of gains.

Three-month copper on the LME was up 2.1% to $ 9,859 a tonne.

Electricity prices have reached record levels in recent weeks, driven by energy shortages in Asia and Europe, which has led to reduced production of some metals and threatens a global economic recovery.

Belgium-based Nyrstar said it would cut production by as much as 50% at its three European zinc smelters starting Wednesday. The three plants have a combined capacity of around 700,000 tonnes per year, according to Commerzbank.

The cuts come at a time when inventories are low in the LME system. Total zinc stocks in LME warehouses fell 1,475 tonnes to 189,600 tonnes, the lowest level since January.

The global zinc market will see a surplus of 217,000 tonnes in 2021, and 44,000 tonnes next year, according to the International Lead and Zinc Study Group (ILZSG).