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

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January 2019 | Base Metals


Zinc: Testing important resistance


Fresh cancellations, limited LME stock inflows, the low absolute level of visible inventories, a weak dollar and improving macro sentiment all remain supportive factors for zinc. But after a decent rally last week, prices have run into important technical resistance. While positive progress in US-China trade talks this week could be the catalyst for an upside break, further significant gains are likely to be limited by the looming supply surge and by a ‘sell-the-rallies’ mentality that may not have been shaken yet

Latest ILZSG data shows deep structural tightness continued in November...
The latest ILZSG data estimated the refined zinc market to be in a 96,600-tonne deficit in November and a deficit of 326,000 tonnes overall in the first eleven months of 2018.

..but is heavily supply-driven...

Global refined production was 12.051m tonnes in the first eleven months of 2018, down by 0.3% year on year. Despite lower output by Chinese smelters (which NBS showed last week fell 1.7% year on year in December and 3.2% in 2018 as a whole), output in the rest of the world increased...

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