Zinc

[winston]

Zinc: A sharp drop in 2012 production in China helped cut into an oversupply of zinc that dates to the financial crisis of 2008-2009.

And if China's new leadership supports infrastructure growth, that will boost zinc prices as well.

Zinc ended 2012 at $2,040/metric ton. The 2013 projection is $2,200/metric ton, an increase of 7.84% from 2012.

The 2014 projection is $2,300/metric ton, up 12.75% from 2012.


Source: MS

[winston]

This "Workhorse" Metal Is Ready for a Breakout

By Peter Krauth

Source: Money Morning


http://moneymorning.com/2014/02/18/work ... -breakout/

[winston]

This Industrial Metal Is Leaving Gold in the Dust

by Sean Brodrick

PowerShares DB Base Metals ETF (NYSE: DBB).

It tracks a basket of three metals - aluminum, copper and zinc.

Source: The Oxford Club

http://www.investmentu.com/article/deta ... T0z4NKqqko

[winston]

Zinc

Glencore's announcement to cut 500,000 tons of zinc production, which is roughly 3.5 percent of global supply should lead to a short-term rally, the group said,

"But beyond very near term zinc price strength, with the demand risks as they are (in our opinion heavily skewed to the downside), it is likely to be prudent to wait for a major tightening in zinc mines before becoming bullish on the refined zinc market"

Source: GS

[winston]

There is some relief for commodities this morning, with zinc rallying as much as 6 percent after refiners in China announced an output cut of 500,000 metric tons next year.

[winston]

Goldman says zinc has bottomed, base metals to rally on short covering

by Huileng Tan

The recent recovery in base metals is probably unsustainable, except in zinc, says Goldman Sachs, which is calling a bottom for the industrial metal used in batteries and paints.

The base metal has rallied 18 percent off mid-January lows around $1,445, making back much of the 20 percent loss it had suffered since the beginning of 2015.

And zinc has the "strongest bull case" of the metals markets, wrote Goldman Sachs' analysts in a note released Thursday, as mine depletion and production curtailments likely continue to tighten supply this year, further supporting prices.

Third-month zinc on the London Metals Exchange closed at $1,715 a ton on Thursday after hitting an intraday high of $1,728 a ton, the strongest close in three months.

Zinc, which has gained as much as 6.8 percent on the LME in February alone, will continue to outperform, Goldman said, forecasting 12-month zinc prices at $1,800 a ton.

Other base metals prices have also rallied around 8 percent off mid-January lows, alongside a recovery in oil prices, a weakening U.S. dollar and a stabilization in China's old economy, and may continue to gain in the next two months, the bank said.

"Against the backdrop of still significant short metals positioning (particularly copper and aluminium), we reiterate that the recent stabilization of the GS China Metals Consumption Index, the upcoming seasonal improvement in metals demand (post Chinese New Year), China State stockpiling, and potential further capacity closures could be catalysts for a short covering rally near term," the Goldman analysts explained.

But the bear market drivers that have pushed base metals 20 percent down on-year and 50 percent lower than their mid-2011 peaks remained intact, they said.

"China and emerging markets deleveraging, together with further medium-term dollar strength and mining cost deflation are set to keep 'capex' heavy metals prices under pressure, particularly copper and aluminium, where supply growth is set to outpace demand growth most significantly," the analysts wrote.

Source: CNBC

[winston]

Goldman singles out zinc as ‘bullish exception’ among metals

LONDON (May 19): Zinc stands alone, according to Goldman Sachs Group Inc.

The New York-based bank has raised its forecasts for the next year on tightening supply and robust demand in China, highlighting its positive prospects in contrast to the “very bearish” outlook seen for all other base metals.

The six and 12-month forecasts were boosted to US$2,100 a metric ton from US$1,700, while the three-month call rose to US$2,000 from US$1,800, analysts including Max Layton said in a May 19 report. Zinc for three-month delivery was at US$1,868 a ton on the London Metal Exchange on Thursday.

“We view zinc as the bullish exception in the metals space, and remain very bearish on the outlook for the other base metals prices, most notably copper and aluminum, where we see very strong supply growth” in the second half, the analysts wrote. “Zinc has by far the most bullish supply-side dynamic.”

Goldman’s endorsement adds to a chorus of bullish forecasts from producers amid expectations that global supply will trail demand. Commodity giant Glencore Plc said this month that structural deficits are now returning, led by zinc, while Vedanta Ltd’s Tom Albanese said in April that zinc had the best fundamentals of any LME metal.

Zinc, used to galvanize steel, will get a boost as China spends more on infrastructure, two major mines were depleted and some producers cut supply, according to Goldman.

‘Most Exposed’

“Zinc is the most exposed base metal to Chinese infrastructure,” the analysts said, raising their forecast for demand growth in Asia’s top economy to 3% from 0%. Higher prices are needed in order to incentivize a sufficient, and substantial, response in supply, they said.

Zinc has rallied 16% this year on the LME, beating the five other major metals. Goldman saw a 3.2% decline in global mine supply this year as consumption climbed 1.9%, triggering a deficit of 114,000 metric tons. The shortfall will increase to 360,000 tons in 2017, the bank forecast.

China’s infrastructure spending rose 19% in the first four months, according to the National Bureau of Statistics. Goldman, which estimated that a quarter of zinc demand comes from the sector, estimated that China had accelerated spending on the segment by the biggest amount since its response to the global financial crisis, according to the report.

Source: The Edge

http://smr.theedgemarkets.com/article/g ... y-context=

[winston]

Strong Zinc Prices

Prices of zinc, used to rustproof steel, climbed above $2,000 a metric ton for the first time since July last week after mine production cuts by Glencore Plc and others.

Goldman Sachs has dubbed zinc the “bullish exception” among metals.

“Zinc has been the best performing industrial metal this year, supported by fundamentals,” Keenan said.

“It should continue to improve over the medium term as the concentrate market moves into structural deficit and the recent cutbacks take hold.”

Source: Bloomberg

[winston]

Why Goldman Is Exceptionally Bullish On Zinc

By Shuli Ren

Goldman Sachs is not thrilled about metals commodities, except for Zinc.

Overnight, zinc price hit its 14-month high, closing at $2,248 a tonne. Goldman now sees zinc prices rising to a peak of $2,500/t, or another 11% upside.

Goldman is bullish because at this price level, demand for zinc exceeds supply, and prices have to go higher to hit equilibrium. For instance, the bank thinks if zinc averages at $2,158 per ton next year, there will be an extra 360,000 ton of demand not met by supplies.

“The very large estimated concentrate deficit is proving harder to fill than we had expected not just because of a lack of a Chinese mine supply response, but also because demand growth appears to be growing solidly,” noted analyst Max Layton and team.

More specifically, China is now relying on the government fiscal stimulus to keep its 6.5% growth target. We already saw that in the latest second-quarter GDP numbers: “Beijing’s Stimulus Policies Keep China Growth Steady“.

Zinc is the most exposed base metal to Chinese infrastructure, with a quarter of its end-use demand coming from this sector. So the harder Beijing spins its wheels, the higher zinc will soar.

To be sure, a bear is a bear. Goldman is bullish on zinc only on a 6-month horizon. As China transitions into a consumption-led economy, it will need less “‘capex’ heavy metals like zinc,” warned the bank.

Year-to-date, India’s Hindustan Zinc (500188.India) has soared 50%, Korea Zinc Corp. (010130.Korea) gained 13.7%, Glencore (GLEN.London) almost doubled. The SPDR S&P Metals & Mining ETF (XME) rose 82.8%.

Source: Barron's Asia

[winston]

The Best Company to Own as This Bull Market Continues

By Brian Weepie

You probably don't think about zinc on a daily basis.

But in reality, the mineral has a lot of everyday uses.

Adding zinc to steel or iron prevents rusting... Zinc oxide is used in paint... Brass is a combination of copper and zinc... And today, the U.S. penny is made mostly of zinc.

Although you might not give much thought to zinc, investors should be paying close attention to the mineral right now. You see, there's a shortage of it around the world.

And that's creating a tremendous opportunity today...

Mining and metals firm CRU Consulting expects we will consume 1.2 million more metric tons of zinc than we'll produce this year. And as we've seen through the first seven months of this year, that deficit has caused the price to rise steadily...

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Plus, the sector has been consolidating in recent years. Some of the world's most productive zinc mines have been shut down recently. Australia's largest open-pit mine, Century, ran out. It did its final mining and production in the second half of last year and shipped its final barge in January.

Zinc prices fell almost 40% – from around $1.10 a pound in May 2015 to just $0.66 a pound in January. That persuaded zinc-producing giant Glencore (GLEN.L) to announce that it would cut one-third – 500,000 metric tons – of its annual production.

And in recent years, there have been initiatives put in place to get people to consume more zinc. It is one of the most common nutrient deficiencies in the world.

Much of the land used for growing crops in China, India, and Africa is very low in zinc. Because of that, China officially promoted the use of zinc fertilizer for its crops beginning in 2012 as a way to aid plant growth and quality.

The effort has been a success. China's use of zinc fertilizer increased 50% (to 60,000 metric tons) in 2015. This increased crop yields by 7%. A similar program recently launched in the Democratic Republic of the Congo.

Overall, zinc usage has increased 30% since 2004. It has risen every year except two over that period.

These supply-demand dynamics have already helped the prices of certain zinc producers. Canada-based Trevali Mining (TV.TO), for example, just started mining zinc at its Caribou mine in New Brunswick. Its share price is up more than 150% from its low this year.

But some haven't risen as much yet. That's our opportunity.

Copper-zinc producer Nevsun Resources (NSU) recently completed a zinc plant on time and under budget. The company has 2.6 billion pounds of zinc reserves. Once it starts shipping zinc in August, Nevsun should benefit from the uptick in the price.

Nevsun has a great balance sheet. The company has $225 million in cash (more than $1 per share), has no debt, and pays a 5.3% yield. Its share price has pulled back 13% since mid-May. That's because Nevsun bought a company with a major copper-gold project in Serbia. The market wants to see how it will digest the acquisition and move the project forward.

The recent price weakness has given us an opportunity to acquire two world-class assets at a solid price. Take a look at shares of Nevsun Resources today.

Source: Growth Stock Wire