After a rough 2015 for many of the industrial metals, including zinc, we are beginning to see a new picture take shape now well into Q1 of 2016.
According to a recent report from the Wall Street Journal, zinc is up roughly 25% from mid-January to mid-March. This is significant because back in January, zinc was at a seven-year low of $1,460 per metric ton.
Partly the increase can be attributed to “speculators (who have) piled back into the market on hopes more production cuts would lead to shortages,” Reuters reported. In addition, zinc prices were also buoyed by the belief of further economic stimulus measures from China.
Daniel Briesemann of Commerzbank (DE:CBKG) told Reuters: “Prices are being driven by sentiment and momentum at the moment, but on a longer-term basis it is also being driven by the expectation that production will be cut, in some cases considerably, and China will probably continue to keep its economy alive with its stimulus program.”
Industrial Metals Enjoying a Rebound
Our own Raul de Frutos reported this week that after a disastrous 2015, industrial metals have rebounded for 2016. In fact, every single base metal is up in price on a year-over-year basis. But he also warns to be wary:
“Although there are glimmers of optimism in the latest metal price trends, there is still a great deal of confusion about whether the drivers of recent price increases can continue to push them higher. We’d like to see a breakdown in the US dollar, further strength in oil prices and signs of a turnaround in China to call this rally in metal prices a bull market,” de Frutos wrote.
You can find a more in-depth zinc price forecast and outlook in our brand new Monthly Metal Buying Outlook report. Check it out to receive short- and long-term buying strategies with specific price thresholds.
by Kyle Fitzsimmons