RE:RE:Manic Marketsadit123 wrote: I subscribe to Coffin's newsletter and he went into detail on base metals this month. He figured the wait for zinc rise was longer than initially thought and if one had patience it was still a good bet into 2017...oh well...
CRU estimated (late last year) 1.3 million tons of zinc inventory (includes non-LME) out of a 13.5 million ton annual market. Their expectation is that in the short and medium term this will weigh on zinc. No one ever defines medium term, but I'd guess that would mean for 2016.
However, keep in mind a few things:
1. Every single zinc analyst got it wrong for years. Everybody forecast deficits which didn't materialize on the scale they expected; this is before China slowed down.
2. The analysts are probably all gun shy. They were so wrong for so long they're probably all be ultra-conservative now.
We're seeing evidence of zinc concentrate mines closing in China both due to economic problems (low zinc price) and because a lot of them are dirty and cannot meet heightened environmental controls. The zinc smelters (and they're about as close as we can get to the zinc miners in China themselves) sure seem to think a concentrate shortage (at least domestically in China) is looming.
Supply has definitely been cut heavily so the question is will demand shrink as much or more than that or not? I doubt anyone really knows because China is the biggest supply and demand driver and their lack of transparency at all levels (not just in the Zinc market... I mean.. I highly doubt China GDP is growing at 6.9% as they claim). So we'll have to just let this play out and see.
But at least the zinc price is rebounding quite nicely right now. Whether it's because Century is now gone or zinc hit bottom due to capitulation/exhaustion? Who knows really.