While demand has been subdued, ANZ said the 500,000 tonne reduction represented one of the single largest cuts in the market, which couldn’t be ignored.

When combined with the closure of MMG’s massive Century zinc mine in Queensland, ANZ is forecasting a larger deficit next year.

“This will most surely plunge the market into a much greater deficit in 2016 and provide some much need support for prices over the coming 12 months,” ANZ commodity strategist Daniel Hynes said.

ANZ is now forecasting a deficit of 300,000t in 2016, up from 150,000t previously.

“We have been relatively positive on the zinc market, with no immediate replacements for the impending closure of several large operations in the coming years likely to create a large deficit,” Hynes said.

Global inventories currently stand at around 48 days of consumption, but ANZ expects inventories to fall to as low as 30 days next year, which previously wasn’t forecast until 2017.

The International Lead and Zinc Study Group met last week in Lisbon and forecast an 88,000t surplus this year, moving to a 152,000t deficit next year.

However, the forecasts were made before Glencore’s announcement on Friday morning.

Despite the positive forecasts, ANZ conceded that other headwinds needed to abate before prices rose on a sustainable basis.

ANZ noted weak demand for galvanised steel and its reliance on export-driven demand as a factor.

“We envisage this issue to remain a headwind until there are more concrete signs thatc onstruction activity in China has stabilised,” Hynes said.

“However, with these production cutbacks pushing stocks to critical levels, the market can’t ignore the fundamentals for too much longer.”

Zinc soared more than 10% on Friday to a two-month high and rose by another 0.2% to $US1820.75/t.