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The International Lead and Zinc Study Group recently released its latest findings, which revealed world usage of refined zinc metal is projected to grow 3.5% in 2016 due mostly to a 4.5% increase from demand in China. The Far East nation’s demand is expected to grow due to continued investment in its infrastructure. In addition,...
[caption id="attachment_71086" align="alignright" width="200"] Want a short-term buying strategy for zinc? Check out our complimentary July Metal Buying Outlook report![/caption] Zinc Drivers 1. Dollar to Euro exchange rate 2. Global production 3. Global capacity utilization 4. Zinc refining capacity utilization rates Market Commentary Last month we reported the International Lead and Zinc Study Group suggested 2015 demand for refined zinc would exceed supply by 151,000 metric tons. Those numbers have turned out to be wildly wrong - in fact zinc is running a surplus to the tune of 181,000 metric tons. In addition, buying organizations will want to pay careful attention to the flow of metal into LME warehouses. According to the most recent LME data available, zinc stocks declined in May by some 57k+ metric tons but some analysts believe that just the opposite will happen through July –...
[caption id="attachment_70211" align="alignright" width="200"] Want a short-term buying strategy for zinc? Check out our FREE June Buying Outlook report![/caption] Top Market Drivers 1. Dollar-to-Euro exchange rate. 2. Global production. 3. Global capacity utilization. 4. Zinc refining capacity utilization rates. Free Webinar: Are You Speculating When You Buy Spot Metals? Market Commentary Zinc remains the best-performing metal of all of the industrial metals. And though zinc fundamentals tell a mixed story – industrial-buying organizations should watch the dollar and commodities markets closely for a more likely price scenario for zinc. The Fundamentals The arguments supporting growing demand include detailed information recently collected by the International Lead and Zinc Study Group, suggesting 2015 demand for refined zinc will exceed supply by 151,000 metric tons. But this new deficit forecast has been revised down because of weaker-than-expected Chinese imports of refined zinc. But...
Zinc prices hit a nine-month high last week helped by a broad recovery in commodity markets and improving supply/demand fundamentals within the zinc industry. [caption id="attachment_78306" align="aligncenter" width="500"] Three-month London Metal Exchange zinc hits a nine-month high. Source: Fastmarkets.com[/caption] Perhaps the Most Bullish Base Metal Zinc (along with tin) has been the best performer among industrial metals this year. Zinc's long-term outlook appears to be quite bright, thanks to the number of key larger-scale mine shutdowns over the past few years. Free Sample Report: Our April Metal Buying Outlook The most recent shutdown, Century mine in Australia, stopped shipments early this year. Glencore, Nystar and others also announced significant production cuts. Combined, it’s estimated that around 10% of global zinc production has been taken offline. On top of that, there aren’t really any new mines coming online to replace the...
The International Lead and Zinc Study Group released its first report of the new year and found the global market for refined zinc was in surplus by 176 kilotons from January to November 2015 with total reported inventories falling by 5 kt during that timeframe. Want a short- and medium-term buying outlook for aluminum, copper,...
Zinc prices are in a falling channel, meaning that prices are falling and bounded by an upper and lower trend line. After 2 years of deficit, zinc supply has outpaced demand so far this year. Prices have plunged 33% in only 5 months. We might see zinc prices hitting a 6-year low soon.
Zinc prices are finally finding some support. After nine consecutive months falling, zinc made a decent comeback over the past few weeks, hitting a 3-month high. [caption id="attachment_76647" align="aligncenter" width="500"] Zinc Hits three-month high. Source: FastMarkets.[/caption] Analysts See Upside Potential Analysts see a lot of upside potential in zinc prices and many of them are calling a bottom and predicting price increases over the next two years. Analysts argue that the zinc market is tightening on a combination of mine closures and capacity cutbacks. Free Sample Report: Our January Metal Buying Outlook In October, Glencore announced its plans to slash zinc production by 500,000 metric tons. Just a month after, top zinc smelters in China indicated their intention to slash 500,000 mt of output in 2016. A Wider View: Not Bullish Yet If you narrow your view to the specific...
Before anyone takes the FT article of this week — reporting on the unusual terms of Glencore’s zinc contract with miner Volcan and containing comments by a senior commodity analyst at Macquarie Bank that this suggests a particularly bullish view on the zinc market by the world’s largest independent zinc supplier, as a prediction that...
I'm really tired of hearing the word "bull market" every time some metal rises in price by 20%. Free Download: The February 2016 MMI Report The common definition of bull market is an increase of 20% from a low and that, to me, is a very bad definition. However, even well-known sources such as The Wall Street Journal or Bloomberg keep using this definition, which only demonstrates a complete lack of understanding of what a bull market is. We saw this when the WSJ called bull market on China's stock market and last week Bloomberg declared a zinc bull market. [caption id="attachment_77220" align="aligncenter" width="500"] 3-month London Metal Exchange Zinc. Source: MetalMiner analysis of Fastmarkets data.[/caption] Is Zinc in a Bull Market? You don't have to be a hedge fund manager to realize that there is nothing bullish in zinc's chart....
The International Lead and Zinc Study Group recently released new data that found the global market for refined zinc recorded a surplus during the first half of 2015, but was in deficit during the second half of the same year. The London Metal Exchange, Shanghai Futures Exchange and Chinese State Reserve Bureau warehouse inventories — along with those...
Every time a major producer announces closures the zinc price heads higher only to falter after a week or two and continue it’s downward grind. Free Sample Report: Our Annual Metal Buying Outlook Last month, Glencore announced it would cut 500,000 metric tons of output with 100,000 mt to hit this quarter, the London Metal Exchange price promptly jumped 10% only to resume its downward progress after a week or so, hitting a six-year low last week of $1487.50 per mt. China Joins The Output Cuts A recent joint statement by the top ten Chinese zinc smelters that they will slash output by another 500,000 mt next year, in an effort to shore up prices, had exactly the desired intent, prices jumped more than 5% on the news. [caption id="attachment_75345" align="aligncenter" width="550"] Miners are cutting back zinc production but prices...
From 2013 to 2015, zinc was in a bit of a deficit, but thanks to China — which is currently producing more than it is consuming in terms of this base metal — zinc supply has now outpaced its demand. Like the other industrial metals we cover, zinc is regarded to be in the "buy only as needed" camp. For 2016, we've identified the main zinc price drivers as: China GDP & PMI Data China zinc production Dollar to Euro exchange rate China imports of refined zinc For a long-term industrial buying strategy for zinc, complete with specific support and resistance levels, download your complimentary copy of our 2016 Annual Metals Outlook report! This report also includes commodities markets and industrial metals market analysis, in addition to key price drivers and commentary on aluminum, nickel, lead, copper, tin and various...
The one thing you can say about a confusing zinc market is we can expect it to continue with conflicting signals and be overlaid with volatility this month. Along with just about all the base metals, zinc has been on a relentless slide for the last year. Free Sample Report: Our New Monthly Metal Price Outlook They all enjoyed a short-lived rally in the spring but normal business quite promptly resumed and the short term expectation is for little change. [caption id="attachment_72449" align="alignnone" width="300"] Graph: Kitco.com[/caption] However zinc, like aluminum, has been the subject of intense investor interest because of the strong forward curve supporting the stock and finance trade. Stockpiles Trending Lower Metal stocks in New Orleans, a location sufficiently far from any significant area of demand to put the metal in limbo, are a direct result of this...
In our bi-weekly zinc price outlook and forecast, we take a look at the most recent trends for the metal's LME price and where they may be headed. Although zinc and lead have proven to be two outliers in the base metals sector and actually shown upsides lately, it's been a rather terrible March for prices. What is the specific level you should watch for before making a buying move?
Zinc continued its downward slide last week as it hit a 5-year low last Monday due to fears about rising stocks and falling demand in, you guessed it: China. The base metal fell by its maximum daily limit of 5% in trading on the Shanghai Futures Exchange as a result, reported the Financial Times. The rising stocks can be placed at London Metal Exchange warehouses in New Orleans, which climbed nearly 60% over the past month, showcasing just how much zinc could be unloaded in the market. Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel?Subscribe to our monthly buying outlook reports!   "The recent increase in LME inventory, particularly in New Orleans, appears to have drawn the market's attention to just how much zinc is sloshing around," Leon Westgate,...
Horsehead Holding recently announced that it temporarily will be halting production at its North Carolina zinc smelter due, in part, to seven-year-low zinc prices and liquidity problems, according to a recent report from the Pittsburgh Post-Gazette. Several banks have already given Horsehead temporary relief on their loan agreements despite having the ability to demand immediate...
Zinc producers, along with investors, have been hoping for a supply crunch to materialize after repeated warning of mine closures and predictions of ore shortages, but supply has remained stubbornly robust. Pool 4 Tool's Automotive SRM Summit As recently as October, the International Lead and Zinc Study Group (ILZSG) was predicting a zinc deficit for this year of 366,000 tons, a figure more than halved to 151,000 tons this month, and itself still higher than a recent Reuters poll predicting a 143,000-ton deficit for the year. Overall, about a million tons of supply will eventually be taken out, Robin Bhar of Societe Generale predicts, but one unknown is how much mothballed production could come back onstream. New Mining Coming Online At $2,200 per metric ton most miners are operating profitably, a 10% rise (we have seen this much already over...
My colleague Raul de Frutos often says fundamentals are not relevant when looking at short-term price direction. It is the trend you have to follow, and for those in the zinc market the last six months have been as good an example of that as any. Free Download: Cost Certainty for International Zinc Trades The underlying fundamental narrative for zinc has been a market on the cusp of deficit for the last two years. The looming closure of major mines Brunswick and Century has fueled a bull story that the zinc market is going into a supply deficit and prices would rise as a result.As recently as January this year, HSBC was saying the market is already in deficit and will get worse as this graph from their Quarterly Metals & Mining Review illustrates. So Where's That Deficit? The World...
The long-term narrative for Zinc is one of closing old mine capacity, limited new mine additions and continued demand growth resulting in a market deficit – at some point. FREE Download: The Monthly MMI® Report – price trends for 10 metal markets. The debate is when. The World Bureau of Metal Statistics puts the market narrowly still in surplus to the tune of just 38 kilotons from January to April, but that’s fairly consistent with their estimation for last year as a whole of 114 kilotons. The International Lead and Zinc Study Group (ILZSG), meanwhile, is reported by Reuters to estimate the world outside China to have a 138-kiloton surplus for the first five months of this year, down from 244 kilotons for the same period last year.
After a rough 2015 for many of the industrial metals, including zinc, we are beginning to see a new picture take shape now well into Q1 of 2016. According to a recent report from the Wall Street Journal, zinc is up roughly 25% from mid-January to mid-March. This is significant because back in January, zinc...