Global zinc short-term outlook May 2023

The prices of base metals, and zinc in particular, continued to slide in the face of worries about the global economy and disappointing macro-economic data for China. In addition to weak demand, zinc remains under pressure amid expectations that refined zinc production will be significantly higher this year, a narrative given a boost by the sharp rise of LME stocks in Asian warehouses this month. While falling Shanghai stocks mean that the overall position is little changed from April, low stocks alone are likely to prove insufficient to offset the impact of weak demand and negative sentiment, and as such the price will remain under pressure for the next few months. Meanwhile, after putting in a very strong performance in March, China's National Bureau of Statistics reports that smelter production fell, possibly a consequence of the ongoing power rationing in Yunnan province which we expect to continue into July.