Zinc rallies as commodities giant Glencore says it will cut 500,000 tonnes of zinc production. As Kirsty Basset reports, it comes in a good week for Glencore's share price, although some analysts remain cautious about the company.
In the face of weak commodity prices, Glencore has decided to take action. The mining giant will cut 500, 000 tonnes of zinc production, or around 4 per cent of global supply. Zinc prices rallied 6 per cent on the news. Hargreaves Lansdown's Richard Hunter. (SOUNDBITE)(English) HEAD OF EQUITIES, HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "There's certainly an element of the fact that they do not consider the zinc price is where it should be at the moment. With that in mind they are looking I suspect to strangle some of the demand within the market." In a statement to the Hong Kong stock exchange, Glencore said it believed the current price doesn't "correctly value the scarcity" of its zinc resources. It also remains positive about the medium and long term outlook for the metal, despite analysts' caution over the company itself. (SOUNDBITE)(English) HEAD OF EQUITIES, HARGREAVES LANSDOWN, RICHARD HUNTER, SAYING: "Until such time as commodities find a bottom and perhaps start to creep a bit higher, Glencore and indeed the mining stocks in general are going to be particularly volatile plays." On Friday, Glencore shares were on track for their best week ever, with a gain of 40 per cent. But the commodities giant has seen shares fall 60 per cent over the last 12 months, as investors fear it's not doing enough to cut its debt, in the wake of a collapse in metals prices, and emerging markets slowdown.