Zinc Price Hovers Near Nine-Year High

Zinc Price Hovers Near Nine-Year High; ILZSG Concludes Market Closed 2016 With Deficit

By
Leia Toovey
-
February 15, 2017 - 20:16 GMT
Zinc prices were lower on Wednesday, with traders unwilling to bid the commodity up higher despite the latest positive market developments. Zinc was last down $17 on the London Metal Exchange at $2886 and traded in the range of $2874-$2920. The commodity is meeting some technical resistance. According to Metal Bulletin, this resistance comes as the metal is trading near a nine-year high. Zinc is finding support at $2670 and meeting resistance at $3200.
Still, positive market developments on Wednesday included a zinc supply deficit in 2016, positive US economic data and a cut in zinc refined production by Korea Zinc.
According to the International Lead and Zinc Supply Group, the global zinc market was balanced in December after a deficit of 45,400 tons in November; however, for 2016 as a whole, the market was in a 286,000-ton deficit versus a surplus of 189,000 tons in 2015. The swing to a deficit is a positive for the zinc market. Earlier in 2016 expectations were that the zinc market would end in a narrow deficit. Had the narrow deficit changed to a balanced market, or a slight surplus later in the year, prices would have been pressured.
Another bullish market development, on Wednesday, Korea Zinc said it plans to cut its refined zinc production by 7.7% to 599,937 tons this year, citing tightening supply and low treatment charges, according to Reuters.
Meanwhile, stateside on Wednesday, there was a large batch of mostly positive US economic data released. This sent the major US stock indices higher while the US dollar experienced a slight pullback. Both these developments should be positive for zinc. The metal is a dollar-denominated commodity which means when the greenback retreats it becomes more affordable for holders of international currencies. Also, the positive US economic data suggests that the world’s largest economy is on solid footing, and that should support positive demand expectations. Still, with the commodity at multi-year highs, these developments were not significant enough to trigger a price rally.