Research

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

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October 2017 | Base Metals


Zinc: Cautious upgrade


We have revised up our Q4 price forecasts, with our previous high-case scenario becoming our new base case. But our forecast further out remains unchanged, largely as we are still modelling a far more fundamentally balanced market in 2018, and as news of mine restarts and project start-ups next year will trigger profit taking and ease tightness further.

Spread tightness aids consolidation in high ground
Zinc prices are consolidating, fluctuating between $3,191/tonne and $3,292/tonne last week. So far downside forays have been limited, which implies continued dip-buying interest. But prices have failed to push to fresh highs as the market absorbs fresh selling. The backwardation in the 3-15 month spread has moved out to $222/tonne having average $87/tonne in September. Meanwhile the 3m to 5-year backwardation has flared out to over $1,000/tonne.

Backwardation attracting more metal into LME warehouses

LME zinc stock flows have been more mixed recently. Tightness in the spreads, combined with higher prices, is finally attracting more metal into LME warehouses. A...

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