LONDON (Reuters) – Zinc has been on the climb this year, defying broader macroeconomic gloom and a previous consensus that its bull run was well and truly over.
Funds are creeping back into the market on the long side and LME broker Marex Spectron estimates speculators held a collective net long of 7 percent of open interest last Friday.
On the London Metal Exchange (LME) three-month zinc hit a seven-month high of $2,810 a tonne on Tuesday. It retraced to $2,715 on Wednesday morning but is still the second-strongest performer among the core base metals this year with a gain of 13 percent. Only nickel has fared better.
A raw materials supply crunch propelled zinc to a decade high of $3,595.50 in February last year, but as the market refocused on a wave of new mine production the price crashed back below $2,300 in August and September.
The narrative shows signs of shifting again. While the raw materials segment of the supply chain is loosening rapidly, the flow-through to refined metal production is proving problematic.