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

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December 2019 | Base Metals


Zinc: Threatening fresh 2019 lows


While zinc is starting to look oversold after its November pullback, our technical analysis warns that the prices still face downside risks. They may be destined to retest the September and year-to-date low at $2,190 per tonne, perhaps even going lower still judging by the large descending wedge-like pattern formed on the chart this year. The trend reflects the market searching for a new lower equilibrium in light of the end of the big annual deficits from 2020. There may be more counter-trend moves, but ultimately the sideways-to-lower drift will prevail.

This week we analyse the bullish and bearish factors driving market sentiment at the moment, as highlighted in our latest Zinc Spotlight report.

Bullish – fundamentals still tight

For the time being the underlying fundamentals remain supportive with the latest ILZSG estimates putting the January-September global deficit at 155,900-tonne, on course for a fourth consecutive annual deficit. Despite initial projections, mine production growth has been relatively modest in 2019, reflecting disruptions and slower-than-expected ramp-up progress. In addition, disruptions and closures are restricting smelters’ ability to raise refined production outside of China. LME stocks have come...

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