Glencore Has Good News for Metal Bulls Starting to Doubt Rally – by Luzi-Ann Javier(Bloomberg News – May 11, 2016)

The resurgence in mining shares this year may be just getting started, if Glencore Plc’s assessment is right.

Demand is set to exceed supply for zinc and some other industrial metals, the mining and trading company said at a conference Tuesday. The outlook comes after supply gluts and three years of declining prices deterred production. BHP Billiton Ltd., the world’s biggest mining company, said separately that it isn’t waiting for prices to recover as it boosts investments in copper and oil.

“Structural deficits are returning, led by zinc,” Glencore said in a presentation posted on its website for the mining conference in Miami. “Supply challenges for copper and zinc remain due to resource quality and scarcity at current prices.”

A gauge of 18 producers tracked by Bloomberg Intelligence has jumped 31 percent this year as metal prices rose on output cuts and easing concerns on the economy in China, the world’s biggest user. Shares of Vancouver-based Teck Resources Ltd. have more than doubled, leading gains in the index. Zinc has climbed 16 percent this year, behind tin’s 18 percent rally. Copper is little changed in 2016.

Citigroup Inc., the bank that was ahead of the game back in 2012 when analysts declared the end of the super cycle of rising demand and prices, now expects a weaker dollar and China’s stabilizing economy mean most commodity markets have reached their bottoms.

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