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

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June 2019 | Base Metals


Zinc: Struggling for traction


Zinc prices remain under pressure in the short term, with the chart set-up suggesting downside risks remain, which only compounds bearish fundamental factors such as the weakness in the galvanized steel market and ample availability in the zinc concentrate market. But a pick-up in LME warrant cancellations is supportive, as is the limited nature of stock inflows despite the persistently deep backwardation in nearby spreads.

Macro drivers continue to dominate
Zinc price saw a choppy week of trade, as did broader risk markets as increasing macroeconomic headwinds were countered by dovish rhetoric from central bank officials, including Fed Chairman Jerome Powell. As a result, markets are now pricing in a 95% chance of a quarter-point cut at the Fed’s July meeting according to the CME Group’s FedWatch tool.

Warrant cancelations could signal stronger demand

Available metrics also suggest the zinc market has only limited demand for additional material. Outflows from LME warehouses have slowed to an average of 357 tonnes per day in...

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