Research

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

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June 2018 | Base Metals


Zinc: Rebound stalls


Resurgent zinc prices have run into resistance above $3,200 per tonne, but there are upside risks in the near term if funds continue to reduce their short positions. Despite this, stock inflows have masked the underlying deficits implied by our supply-demand estimates, and mine production growth is still expected to accelerate during H2, so we would not get overly bullish.

Rebound stalls
While copper stole the show last week with a solid gain of 5.8% or $401 per tonne, zinc was no slouch, closing Friday with a 3.7% gain as the second-strongest performing base metal. LME zinc set a five-week high at $3,220 per tonne on Wednesday June 6, however further gains were prevented as another modest stock landing put a dent in bullish sentiment.

Indeed, with the nearby backwardation widening into the low $20s (from $0.75 per tonne a week earlier) – probably at least partly indicative of short-covering – we would not be surprised if more metal is sucked back onto LME warrant while the tightness in the spreads persists.

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