Any commodity which rises by 5% over just two weeks is worth a closer look, except when it is zinc, the ultimate industrial metal, which has disappointed for so long that even the prospect of an even stronger price recovery is being ignored.
Used almost exclusively in galvanizing steel to protect it from rusting zinc has been suffering from chronic over-supply and a depressed price which has seen it limp along at less than $1 a pound for the past three years.
That psychological barrier of $1/lb could be broken in a matter of days with the zinc price on the London Metal Exchange reaching 98.69c on Wednesday, up 5c since June 12.
What’s driving zinc is the simplest of all economic forces. The over-supply is fading,. Stockpiles are shrinking. Old mines are reaching their use-by dates, and no major new mines are planned.
Over the next three years an estimated 1.5 million tonnes-a-year of newly-mined zinc will disappear from the market thanks to mine closures, the equivalent to losing 11.5% from a market which consumes 13 million tonnes of zinc a year. Continue Reading →