Inditrade Derivatives & Commodities Ltd
Published on 20/01/2018 12:14:18 PM

Zinc

Zinc has been, and continues to be, one of the best performing commodities in the last 2 years with 2016 witnessing a stellar performance with sharp rallies in prices. The sentiment continued this year as well with the metal outperforming all other industrial metals as well as bullion and energy till date, though the start to the year has been on a bearish note with prices correcting lower in the initial months. The entire rally in zinc was based on strong fundamentals viz., decline in supply at the mine level. The declines in supply has been on the cards since mid 2015, but eventually played out in 2016 as major mines have come to the end of their life sucking out almost 300,000 tonnes from the market. On top of that, mining major Glencore decided to cut its own production to the tune of 500,000 tonnes to push prices, which were lumbering near $1600 levels. Adding further impetus to these developments was the decision by top Chinese smelters to reduce their production by 500,000 tonnes. All these together helped zinc prices to see a complete turnaround, signaling the end of bearishness. The increase in demand from China during the low price months only helped in tilting the market balance completely towards a deficit.