COLUMN-Zinc market tightness confounds bearish expectations – by Andy Home (Reuters Africa – October 24, 2018)

LONDON, Oct 24 (Reuters) – The refined zinc market looks super tight. London Metal Exchange zinc spreads are stressed, with the cash-to-three-months premium CMZN0-3 hitting a one-year high of $63 per tonne earlier this week.

LME stocks are low, at just 99,900 tonnes excluding metal earmarked for physical load-out. It’s the same story in Shanghai. Shanghai Futures Exchange (ShFE) zinc spreads are also in backwardation, while the premium for metal in bonded warehouses shot to multi-year highs in September.

ShFE stocks have rebuilt slightly since the start of the month to 53,500 tonnes. But that’s still well short of the 160,000 tonnes that were there as recently as April.

“Screamingly bullish” is how analysts at Citi described the Shanghai market earlier this month. (“Zinc’s screaming”, Oct. 5, 2018). Not the sort of headline you’d expect in a market that is weighed down by expectations of a looming supply surge.

Feast, however, has been postponed, leaving the physical supply chain hungry for units. The International Lead and Zinc Study Group (ILZSG) made some interesting revisions to its supply-demand forecasts in its October assessment of the zinc market.

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