This Morning in Metals: A Zinc Stink; Oil Price Volatility Here to Stay?

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This morning in metals news, zinc is undergoing some tight times, according to Reuters’ Andy Home, and oil price volatility is still top of mind as we go into the Thanksgiving holiday in the U.S.

Oil Prices Tumbled, Look to Stay Volatile

As I filled my tank earlier this morning before heading to my mother-in-law’s for Thanksgiving, I noticed the effects of Tuesday’s 6% percent drop in oil prices at the pump.

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Among heavy trading volumes, the recent drop in oil prices — as well as major losses on the Dow — have some investors and market watchers worried.

Goldman Sachs put out a note today saying the bank expects oil markets to “remain highly volatile in the coming weeks,” according to Reuters.

As OPEC pushes its producers to cut output to the tune of 1 million to 1.4 million bpd, the investment bank is quoted as saying “the renewed price collapse reflected ‘concerns over excess supply in 2019 … (and) a broader cross-commodity and cross-asset sell-off as growth concerns continue to mount.”

Quite a Stink Over Zinc

Reuters’ Andy Home is calling this moment “zinc’s period of peak tightness,” due to skimpier metal availability from mine capacity crunches and closures and the greater influence of investor dollars driving the zinc price over the past decade.

Indeed, the ILZSG is confirming the zinc market deficit, as reported by my colleague and MetalMiner Editor Fouad Egbaria — check out the full article, published today.

“The single most important zinc market trend is that of falling refined metal production in China, itself a product of months of deteriorating mine concentrates availability,” Home writes.

“None of which means that the zinc price is going to go on the sort of super nova rally seen last decade,” he continued, “at least not unless the [investment] fund herd drastically rethinks its views on both zinc and the bigger trade picture.”

MetalMiner’s Take: According to our most recent monthly outlook report, the key drivers of the zinc prices to keep an eye on include the overall zinc deficit this year and into 2019, rising zinc premiums (which have reached the highest level in six years), and smelting capacity constraints.

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