You should be buying Zinc’s run has all the hallmarks of a supply (or lack thereof) driven move, which tend to be swift and devoid of major pullbacks or periods of choppiness.
This is supported by the hard data, which shows that since 2012, we’ve seen over 1 million tonnes (Mt) of shuttered production in a 13Mt market*1. Glencore alone (the world’s largest zinc producer) cut its zinc production by 24% in 2016, a year which also saw the closing of two of the world’s major zinc mines in Century (Australia) and Lisheen (Ireland).
We have been hearing of potential tightness in the zinc market for a while now, only to see “hidden” supply (likely of Chinese origin) dumped on the market whenever prices rallied.
However, this dynamic seems to have completely changed and Chinese figures now show the country is dealing with a significant mined deficit caused by declining production from the countries domestic mines.
Last week’s news that the Chinese government ordered a shutdown of all the lead and zinc mines in the Hunan province’s Huayuan county (a major zinc producing region) suggests that the countries zinc deficit is only likely to grow in the near to mid-term, further adding to the already strong tailwinds currently affecting the zinc price.