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

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September 2018 | Base Metals


Zinc: Macro cap


A tentative price base is forming, and in view of the persistent supply tightness in China, zinc prices could be squeezed higher in the short term. However, broader macroeconomic concerns are still holding back sentiment and prices in general across all the base metals. So, the complex, including zinc, remains vulnerable on the downside if a deeper bout of risk aversion is triggered.

Zinc could revisit previous lows as risk-off sentiment dominates
The LME zinc price sell-off appears to have run its course, at least for now, with price weakness limited by support around $2,400 per tonne. But the rebound is struggling to attract follow-through buying. In addition, the current macroeconomic backdrop of rising trade tensions risks triggering another down leg as President Donald Trump has threatened to intensify his trade war with China after trade figures showed China’s trade surplus with the US widened to $31bn in August, compared with $28.08bn in July.

Zinc, as a result, remains at risk of revisiting the mid-August lows around $2,280 per tonne in the short term, even though its own fundamentals look tighter and could feasibly justify a decent rebound....

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