Research

Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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April 2017 | Base Metals


Zinc: Rally certain to resume


The zinc market remains a volatile place at present with prices attempting to rebound after finding good support around $2,500/tonne. Previous corrections within this bull market have been viewed as dip-buying opportunities, and we think this one will be treated the same, especially now real tightness is starting to be seen. We have lowered our nearby price outlook this week to reflect the weak start to Q2 after this deep correction, but we are still convinced of an upward trajectory from here.

Support found, but price still looks vulnerable in the short term
The zinc market remains a volatile place at present with the LME price attempting to rebound after finding good support around the potentially pivotal $2,500/tonne level. Previous corrections within the current bull-run, which began in early 2016, have been viewed as dip-buying opportunities, and there is little to suggest this dip should be any different.

Also, the fact that longer-dated spreads have eased significantly again indicates sell-side hedgers are keen not to chase the market lower. The backwardation in the 3-month to 5-year spread settled Friday at $345/tonne from $464/tonne prior to the Easter break.

Also supportive is the fact that LME stock withdrawals have accelerated. Outflows have averaged 1,675...

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