Miners’ revenues have plunged from around $800/t to below $600/t zinc since early October.  This has triggered a further wave of cutbacks.  Smelter cutbacks are also under way, at least in China.  However, smelters may still place more importance on securing sufficient feed in 2009, rather than obtaining the best contract terms, in an effort to minimise unit on-site costs.

Further mine production cuts remain highly likely

Smelters are preparing their own cuts too

But miners may still have the upper hand in 2009 contract talks

Lead surplus is not inevitable

Recent mine cutbacks could shave at least 75,000t from next year’s Western concentrate supplies.  Miners are seeking a substantial cut in contract TCs, but smelters are after a major increase in silver RCs.

Focus:  Several mine production cutbacks have been announced since ILZSG compiled its forecast.  We concur with many of its comments on expected growth, and the recent closures largely explain the differences between our forecasts.