Zinc prices settled this month between $2,000-$2,120 per metric ton, as we pointed out last month.
Zinc demand probably remains optimistic, at least compared to other industrial metals. This has been reflected in the price since, during the past two years, zinc prices on the LME have traded sideways between $2,200 and $1,800 per ton, while other industrial metals kept falling.
On the other hand, despite the effort zinc prices are making to go higher, we are skeptical on how much higher they can go.
In the next few months, we expect zinc prices to remain above $1,950 per metric ton. However, we don’t see prices trading above $2,200 this year, as prices haven’t been able to trade above those levels for the past two years and the overall picture of the metals sector is not attracting investors to pour money into zinc.
What This Means For Metal Buyers
We expect zinc prices to remain supported in the next few months. However, we don’t expect zinc prices to trade well above today’s levels through 2014.
Buyers may want to think twice before taking long-term positions, as we still don’t see real strength in the price unless zinc manages to trade significantly above $2,200 per metric ton.