Zinc in a bull market mode... Zinc approaches bull market Zinc rallied to the highest since October, putting the metal on track to enter a bull market, after production cuts tightened global supplies. Other metals and mining shares climbed.
Zinc soared 21 percent in about six weeks after Glencore Plc and Nyrstar NV last year announced production cuts to cope with a slump in prices. The market will have a deficit of 440,000 metric tons this year, the most in more than a decade, according to Mitsui Mining & Smelting Co.
“The supply-side factor -- the dip in output -- is the reason for the price rise,” Casper Burgering, a senior economist at ABN Amro Bank NV in Amsterdam, said by phone. “There is really no reason for these low prices and I think that markets have started to realize that.”
Zinc added 1.9 percent to $1,777.50 a ton as of 11:39 a.m. in London. A close at this level would represent an increase of more than 20 percent from its Jan. 12 low, the common definition of a bull market.
Steel Recovery The metal is also rising as steel prices advance in China, Daniel Hynes, a senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by phone from Sydney. Hot-rolled coil is at its highest since August on the Shanghai Futures Exchange. While imports of refined zinc by China, the biggest consumer, fell in January from the highest level since 2009 a month earlier, they were up 150 percent from a year ago.
Zinc is now the “brightest” of the London-traded metals due to tight supplies, Macquarie Group Ltd. analysts wrote in a report e-mailed Feb. 19. Benchmark fees that smelters charge miners for treating concentrate are set to drop, a sign mine output is sliding relative to demand.
The metal is the top performer on the London Metal Exchange in 2016, rising 11 percent. Tin is next with an increase of 9.1 percent. The LME gauge of six industrial metals has risen 8 percent since dropping to its lowest in almost seven years last month.
Industrial metals were also bolstered on Monday by optimism the appointment of a new head for China’s securities regulator would restore confidence in the country’s capital markets.