Shine Minerals Corp V.SMR

RE:Zinc Prices to Increase

[SusanBolland]

Target10 wrote: In a most recent report from Macquarie, they believe that the Zinc price has bottomed out.

Commodities Comment Ground rushes up towards zinc
 
Feature Article: We have been bearish towards zinc for some time, chiefly on the rising supply/struggling demand story, and we think that we are now finally moving into the end stages of the correction. Our forecast that the price will find a floor around $2,000-2,100/t in Q4/Q1 is close upon us, and so in this piece we start to think about the events that should arrest the descent from mid-2020. Unlike the other big base metals, zinc demand has already had its annus horribilis in 2019, with the important autos market slumping in China and Europe. More recently the figures have begun to move sideways, however, and growth seen next year would represent a strong inflection for 24% of zinc end-use demand. Our China economist Larry Hu’s conviction is for an infrastructure-led “Level-3” stimulus push in this quarter or the next, and zinc is amongst the most exposed metals to this sector, while consumer goods are also seen as a likely target for support. On the supply side, prices are now pressing into the mine cost curve and as we push towards $2,000/t, more candidates for capitulation will be created, which should eventually begin to manage the concentrates oversupply. Meanwhile, smelter capacity remains highly utilised, and any shocks here in the next couple of years would be impactful.