Nyrstar said that the zinc industry's swift supply side response to falling prices should help support prices in the short and medium term.

It said that "The effects of the sudden and severe downturn in the global economy in the second half of 2008 are expected to persist throughout the year, which will make for a very challenging 2009. The response from the zinc industry to the downturn has been encouraging, when compared to previous economic downturns."

Nyrstar itself announced zinc production cuts of 35,000 tonnes in Q4 2008 with further cuts amounting to 190,000 tonnes instigated for the first half of this year.

It said that "Such a rapid and significant supply side response to economic conditions should give support to zinc prices in the near to medium term, and provide for medium to long term upside. But while production costs will benefit from lower energy prices and reduced wage inflation, the collapse in sulfuric acid demand poses an operational risk in the event that Nyrstar's acid output cannot be sold."

(Sourced from www.platts.com)