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56 E&MJ; • FEBRUARY 2018 www.e-mj.com MARKETS During 2017, the combination of sched- uled mine closures, Glencore's strategic cuts, and the impact of environmental inspections in China depleted global stocks of zinc concentrate. The conse- quent constraints on refi ned produc- tion ensured that the rally in the zinc price that started in 2016 was sus- tained with the price moving from $2,556 per metric ton (mt) at the end of 2016 to $3,309/mt at the end of 2017, a rise of 29% and its highest lev- el for a decade. With the zinc prices close to 10-year highs, the key issues for this year revolve around the supply response to such high prices and the availability of refi ned met- al, according to a recently released re- port, 2018: Five Things to Expect From Zinc by WoodMackenzie. The Chinese authorities are expect- ed to maintain their strict stance on the environment in 2018. Since 2014, a large number of small lead-zinc mines were closed due to environmental inspec- tions. Chinese zinc smelters will also face environmental pressures in 2018. WoodMac expects mine production to increase by 664,000 mt in 2018. This follows an estimated increase of 785,000 mt in 2017. The extremely strong growth in mine supply will be insuffi cient to re- plenish global concentrate stocks, which are forecast to remain at critically low levels. Smelters rely on adequate lev- els of concentrate to provide a cushion against disruptions. With suffi cient new mine supply, the world's zinc smelters could collectively increase output by 6.5% or 880,000 mt, according to WoodMac, and high zinc prices would ensure that this can be produced profi tability. If they are unsuccessful in increasing output in 2018, the modest defi cit in concentrate could be eliminated, but the more sig- nifi cant consequence would be a larger defi cit in refi ned metal, which would drive prices even higher, possibly risk- ing demand destruction. Total global refi ned stocks are esti- mated to have fallen from 2.7 million mt at the end of 2016 to 1.8 million mt at the end of 2017, equivalent to 47 days of global consumption. Meanwhile, ex- change stocks fell from 500,000 mt to 250,000 mt (equal to six days of global consumption) over the same period. WoodMac believes zinc metal stocks could fall below the critically low- level equivalent to 40 days of global con- sumption at the end of the second quarter. This provides the basis for the price climb- ing to $4,000/mt in the third quarter. To view the entire report, visit www.WoodMac.com. What to Expect From Zinc in 2018 Gold and silver prices provided by KITCO Bullion dealers (www.kitco.com). Platinum group metals prices provided by Johnson Matthey (www.platinum.matthey.com). Non-ferrous base and minor metal prices provided by London Metal Exchange (www.lme.co.uk). Iron ore prices provided by Platts Iron Ore Index. Currency exchange rates were provided by www.xe.com. (February 2, 2017) Precious Metals ($/oz) Base Metals ($/mt) Minor Metals ($/mt) Exchange Rates (U.S.$ Equivalent) Gold $1,331.90 Aluminum $2,228.00 Molybdenum $16,000 Euro (€) 1.246 Silver $16.58 Copper $7,066.00 Cobalt $80,750 U.K. (£) 1.412 Platinum $1,000.00 Lead $2,683.00 Canada ($) 0.805 Palladium $1,051.00 Nickel $13,795.00 Iron Ore ($/dmt) Australia ($) 0.793 Rhodium $1,860.00 Tin $21,770.00 Fe CFR China $72.94 South Africa (Rand) 0.083 Ruthenium $195.00 Zinc $3,577.00 China (¥) 0.159