Shortages, shrinking stocks to energize zinc bulls

LONDON (Reuters) – Shortages for a fourth year running and historically low stocks of zinc are likely to propel prices of the metal to $3,000 a tonne over coming months, while an end to the U.S.-China trade dispute could spur even more gains. Benchmark zinc on the London Metal Exchange at around $2,760 a tonne is up around 15 percent since the start of the year, but stands well below the 10-year high of $3,595.50 seen in February last year. “It’s a story of shortages and depleted stocks, we’re looking for a price rally to at least $3,000, possibly above $3,500,” said Wood Mackenzie analyst Andrew Thomas. “If we get a trade agreement between China and the United States, we could go above $3,500.” (Graphic: China PMI new orders index vs zinc prices link: tmsnrt.rs/2VDyd9Y). The market for zinc, used to galvanize steel, traditionally goes from feast to famine as high prices incentivise higher production, flooding the market with metal, followed by falling prices and output cuts. But that pattern broke in October 2015 when Glencore shut 500,000 tonnes of capacity, around one-third of its total, to preserve the value of its “reserves in the ground at a time of low… continue reading

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