A historic backwardation in zinc forward prices has its first major casualty, with Thailand's foremost zinc distributor set to close that part of its business as a result.
Padaeng Industry, formerly a primary zinc smelter which pivoted into the renewable energy industry, will close its 50,000 tonne per year zinc metal distribution business at the end of 2018, the company said in a Stock Exchange of Thailand filing dated December 7. "The international zinc price has been declining, together with higher competition in the domestic market, while the operating expenses are higher," the company said, adding that metals trading performance had not been in line with expectations. Padaeng's decision to close its 37-year-old zinc business came at a time when the zinc forward spread backwardation rocketed to record highs. Wide backwardations since 2017 have become a chronic problem for companies that hold and distribute the metal. "They were short of the...