Top Market Drivers
1. Dollar-to-Euro exchange rate.
2. Global production.
3. Global capacity utilization.
4. Zinc refining capacity utilization rates.
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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 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 not all agree that demand looks positive. The combination of a Chinese slowdown in construction (and reduction in demand for galvanized steel) and increased output, suggest an excess of supply.
Still some believe that major zinc deposits have run down and zinc will move into a deficit situation.
Three-month zinc closed the month of May at $2,185/mt, down nearly 7% from last month. And though zinc had a strong price rally in April, the dollar’s ascent in May pushed zinc
prices lower. As long as the dollar holds, and commodity markets remain bearish, we don’t see zinc breaking out of the rest of the industrial metals pack.