Zinc prices are expected to firm up towards the end of the year to around $2,800 – 3,000 per tonne levels if the current green shoots witnessed in the US and China sustain while Europe maintains an economic status quo, said Arun Misra, CEO, Hindustan Zinc Ltd.

Zinc demand in India is expected to remain strong on the back of increased government spending on infrastructure ahead of the 2024 general elections; and other states going to polls later this year, he added.

Benchmark London Metal Exchange (LME) zinc prices are hovering around $2,500 per tonne levels. Weak demand apart, there are also oncerns of over-supply across warehouses.

“Global economic conditions are still volatile. But, there’s some news that inflation levels are coming down in the US and if infrastructure development is prioritised there, it is good news. Europe has held itself together and not slipped into deep recession as expected. The world is learning to live with this situation now. And China is showing some positive signs again. In June, it came up as a net importer again. So if these trends hold through the next few months, then zinc prices are expected to firm up to $2800 – 3,000 per tonne levels, around December.,” he told businessline.

Global outlook

Earlier this year, Ireland’s Tara zinc mine closed, when the price of the galvanising metal was around $2,300 per tonne levels at LME. The announcement of the mines’s closure due to maintenance led to some upward price movement, at around $2,400 -2,500 per tonne levels. But, it had not alleviated concerns of oversupply.

Globally, stocks at LME warehouses have seen a rise to around 90,000 tonnes, the first time since May last year. This, say market sources, was driven by increased deliveries into Singapore.

FY24 guidance

Vedanta-owned Hindustan Zinc reported a 36 per cent drop in net profit for Q1FY24 to ₹1,970 crore on account of 22 per cent drop in sales on a y-o-y basis (to ₹7,282 crore).

According to Misra, the company’s cash generation was around ₹2,200 crore in Q1 and it is expected to improve in the coming quarters. The company will continue its cost optimisation plans and enhance the share of value-added-products.

The company’s mined metal production target for FY24 was 1.1 million tonnes (mt), while its cost guidance was in the range of $1,125 – 1,175 per tonne. “Our focus would be to maintain the cost guidance at the lower end of the band,” Misra said.

Hindustan Zinc’s gross debt stands at around ₹9,300 crore while cash and cash equivalents on books are around ₹9,700 crore.

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