Industrial metals zinc and lead didn’t make exciting moves this month. They didn’t do much at all. In fact, you don’t necessarily need to keep reading if you already saw our analysis last month, but you should anyway.
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For the past two years, both zinc and lead have trended flat in a depressing period for commodities. It is very important for buyers to understand the current picture to be ready when buying opportunities finally show up.
Zinc has remained between $2,200/t and $1,800/t for the past two and a half years years. Zinc is not showing real strength and we don’t see price risk in 2014. We recommend buyers not worry about normal market fluctuations and don’t go long until zinc breaks above key levels. Buyers might want to be hedged when zinc breaks above $2,200 per metric ton.
3M LME Zinc price since 2011
In the same manner, lead seems unable to reach new heights and nothing suggests immediate price risk for it, either. If lead crossed above $2,250 per metric ton that would be a good point for buyers to start increasing their hedging positions. Meanwhile, fluctuations between $2,000-$2,250 should be considered normal.
3M LME Lead price since 2012
What This Means For Metal Buyers
By reading the market and understanding when a metal is likely to have upside momentum, buyers can set price targets, managing their risk exposure and reducing costs without depending on subjective opinions that try to guess which direction prices will take.