Zinc may outperform other industrial metals in the coming years as planned mine closures reduce supply, according to Wood Mackenzie Ltd.
“Zinc could be the rising star of the base metals market going forward,” Richard Wilson, chairman of metals at Wood Mackenzie, told reporters in London today. “Zinc could be quite exciting in a couple of years.”
Lower prices for gold and silver, which are often mined together with zinc, may put pressure on mine production and force more closures, particularly in South America, he said. Zinc will average $2,200 in 2014, trading closer to $2,000 in the first half of the year because of high stockpiles before rising in the second half, Andrew Thomas, an analyst at Wood Mackenzie, said.
Eoin Treacy's view Zinc peaked as early as 2006 and bottomed in 2008. It has been ranging mostly above $1775 since 2010 and is currently firming from the lower boundary. The rationalisation of inefficient supply which is going on in the mining sector has largely resulted in industrial metal prices returning to an equilibrium but a demand side catalyst is likely required to spur a return to demand dominance beyond the short term.
David's Speaking Engagement - Where are we in the long-term global stock market cycle and what can we look forward to? - David Fuller would be delighted to chat with subscribers during the informal refreshment breaks at this event.
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