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

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September 2019 | Base Metals

Zinc: Price rebound pauses

Fundamentally, there seems little to be overly bullish about on the demand side and supply is recovering steadily. That said, we believe that zinc is oversold and any bullish surprises for demand, such as a breakthrough in trade talks, could turn the market round quickly. This is especially so given the 27% increase in speculative short positions since the end of July to a record high level, which sets the stage for potentially aggressive short-covering rallies.

Price rebound limited by weak demand outlook
The LME zinc price sell-off appears to have run its course, at least for now, with price weakness limited by support around $2,200 per tonne. But at the moment, the rebound is struggling to attract follow-through above $2,300 per tonne, as bearish macro factors continue to overhang sentiment.

The JPMorgan/Markit global manufacturing PMI reading of 49.5 for August, while up slightly from July’s 81-month low, showed the downturn in manufacturing activity extended to a fourth month, which bodes ill for metal demand and underlying sentiment. Additionally, still-falling new orders...


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