Zinc prices jumped to a new five-year high on Monday, just as the International Lead and Zinc Study Group (ILZSG) released its 2017 forecast.
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The group continues to anticipate that the supply of refined zinc metal will be constrained by a sharp reduction in the availability of zinc concentrates and that global usage in 2016 will exceed production by 349,000 metric tons resulting in a further drawdown of both reported and unreported stocks. In 2017, the market is expected to remain in deficit with the extent of the shortage forecast at 248,000 mt.
Zinc hits a five-year high. Source: MetalMiner analysis of Fastmarkets.com data.
Over the past few weeks, zinc struggled to build on gains, resting at $2,400/mt, a level from where investors stopped chasing prices higher in previous years.
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The fact that prices rose above this level despite the pressure of a stronger U.S. dollar is quite bullish. Investors are still buying on zinc’s bullish narrative of supply shortfall. Zinc market sentiment is poised to remain bullish.