Europe's zinc smelting output has been squeezed further by cuts to capacity caused by high energy prices that are likely to further weigh on output and lift zinc prices higher heading into the autumn.
Global metals producer Nyrstar is the latest producer to make further capacity curtailments. It will put its Budel zinc smelter under care and maintenance from 1 September, citing "external factors".
Its other two zinc smelters — Auby in France and Balen in Belgium — will continue to operate, but at previously reduced capacities.
Nyrstar previously curtailed production across its European zinc smelters because of surging energy prices. And the Budel shutdown comes as Netherlands energy prices rise past their previous peak.
The Argus over-the-counter base-load day-ahead price was €491/MWh on Thursday, rising 396pc on the year.
The energy price hit a peak of €527/MWh on 16 August, above the previous peak of €455.75/MWh on 7 March.
Swiss-based commodity firm Glencore said recently it is a "very challenging" time to be in the zinc smelting industry because of high European power prices.
Glencore put the zinc line at its Portovesme operation in Italy on care and maintenance late last year because of soaring energy costs.
The line continues to be out of action, but the asset's waelz oxide line, which recycles zinc from steel dust, remains operational.
Another major European zinc producer, Boliden, has been less affected by the power crunch, which has caused other smelters to curtail production.
The company has two zinc smelters, Odda in Norway and Kokkola in Finland.
Currently production at Odda is reduced temporarily because of a strike, Boliden said.
But Kokkola is running at normal rates, and historically minor production decreases have been made in both zinc smelters in response to energy prices, a company spokesperson said.
The overall cuts made to European zinc output in the past year have been a major driver for high underlying London Metal Exchange (LME) prices over the same period. Europe is responsible for about 15pc of global refined zinc supply and 30pc excluding China.
Zinc prices on the LME have followed European power prices higher over the past month, and have largely tracked previous power price spikes over the past year (see graph).
The new Nyrstar supply cut in Europe will come at a time when warehouse inventories for the metal are already running very low, with just over one day's demand available in the LME warehouse system.
Total on-warrant zinc stocks stood at 48,550t on Thursday, down 67.8pc from the start of the year and down 71.8pc from this time a year ago.
In European LME-registered warehouses the situation is even tighter, with only 25t on-warrant in Bilbao, Spain.
