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

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July 2018 | Base Metals


Zinc: Risks remain after limp relief rally


Dip-buying has emerged around $2,700 per tonne, but in view of the rising trade uncertainties buyers are likely to be cautious at best, which suggests relief rallies may be limited for now. Having dropped by over $500 per tonne in the past three weeks, zinc’s sell-off appears excessive, especially as we continue to project meaningful supply deficits in Q3-Q4. But for prices to rebound, the market is likely to need to see stocks falling consistently again.

Rebound falters
Amid volatility across the base metals, zinc staged a modest end-of-week rebound on Friday, closing up 2.2% or $58 on the day, after the dip to a one-year low of $2,667 per tonne on Thursday seemed a step too far. But while the complex as a whole is in a steadier mood at the start of this week, LME zinc prices have bucked the trend, with the current chart figuration suggesting overhead selling pressure remains ahead of $2,800 per tonne

Limited short-covering

The LME nearby spreads have eased, with the cash/three-month backwardation quoted at $25 per tonne basis evening evaluations on Friday, July 6, from $52.5 per tonne the previous week. The easing of the backwardation suggests less short-covering, which...

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