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

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February 2019 | Base Metals


Zinc: Q4 2018 producer results in focus


Judging by the rally in prices and the rise in open interest last week, zinc bulls have been emboldened by a series of positive macro and micro factors lately. These include optimism for further progress in the US-China trade talks, falling availability of exchange stocks, talk of Chinese infrastructure spending boosting demand and a smelter bottleneck restraining supply, plus a dovish Fed putting the dollar under pressure. Against this backdrop, there may be further risks to the upside for prices in the short term. But recent guidance by major zinc producers reinforces our view that prices are likely to soften in H2 2019 as rising supply leads the fundamentals to rebalance.

Testing $2,800 per tonne The LME three-month benchmark is testing fresh seven-month highs at the $2,800 per tonne level at the start of this week, as traders focus on the bullish stories and shrug off more negative downstream signals. For example, the JPMorgan/Markit global manufacturing PMI reading for January softened to 50.7 from 51.4 in December, and compares with 54.4 in January 2018. In the US, light vehicle sales ran at a seasonally adjusted annual pace of 16.70 million vehicles in January, down from 17.19 million in January 2018. Q4 producer...

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