LME zincs 2018 high was $3,595 per tonne back in February and, since then, prices have stepped lower, as far as $3,070 per tonne in mid-April. This came after a sell-off triggered by fears that Chinas State Reserve Bureau (SRB) was planning to release some of its stockpile.
We said at the time that the price plunge was an overreaction and, indeed, by the time of writing zinc was back above $3,200 per tonne the level around which prices consolidated throughout March. Q1 was a rather loose period for the zinc market, but falling exchange stocks support our view that the fundamentals would retighten in Q2. That means that it may not be long before zinc prices push higher again, though they need to vault technical resistance around $3,300 per tonne first. Although a somewhat bullish short-term outlook, Metal Bulletin Research also still thinks that a background of rising supply will loosen the fundamentals again in Q3/Q4 so the coming few months may represent a window of opportunity for zinc bulls.
Analysis by Andy Cole, Metal Bulletin Research
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