Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Zinc, the "Workhorse" Metal Is Ready for a Price Breakout

Commodities / Metals & Mining Feb 18, 2014 - 01:54 PM GMT

By: Money_Morning

Commodities

Peter Krauth writes: It's not surprising that precious metals get the most attention.

They're considered "precious" thanks to their scarcity, beauty, and history as a store of value.

That's all true. But industrial metals do the really hard work.

There's one base metal used worldwide to produce rustproof steel, in a variety of alloys, and even as a health supplement. It's not often spoken of as a great addition to your investment portfolio.


Here's the thing: It's poised to break out of a low multi-year price range and challenge the better-known metals in producing profits.

In fact, a stunning rally is in the works... and a great opportunity to seize an upside that others will miss, blinded by focusing on this metal's shinier counterparts...

The Double-Digit Returns Are Already Starting
Since the 2008 financial crisis, zinc prices had remained relatively quiet. Meanwhile, copper and gold have since managed to set new highs.

Then last fall things started to change, with zinc prices seeing some impressive action. Zinc shot up from $0.84/lb. to $0.96/lb. from mid-November to early December.

That was a 14.3% gain in just three short weeks. That move led the metal out of a tight trading range between $0.81 and $0.89 that lasted for most of 2013.

We've seen a small pullback and bounce since then, but there are increasing signs that this trend is just getting started.

Bullish Economic Signs
According to a recent report from Bloomberg, "Mitsui Mining & Smelting Co., Japan's top zinc producer, raised annual charges to overseas buyers by as much as 70% amid rising Chinese consumption, up from a 15 percent gain last year." Asian demand appears to be garnering momentum on supply constraints.

Morgan Stanley is forecasting a wider global deficit this year.

What could be stimulating zinc prices like this? In two words: supply and demand... simultaneously.

On the supply side, a number of significant mine closures are going to limit zinc resources for the next several years. Head of zinc trading at Glencore Xstrata, Daniel Maté, told investors recently,"There is likely to be a structural deficit in the zinc market in the short to medium-term future."

Xstrata's own Canadian mine, Brunswick and Perseverance, was shut down in 2013. Later this year, Vedanta's Lisheen mine in Ireland is also expected to close. Even the world's third-largest zinc mine, Century in Australia, is likely to see its last production by mid-2105 as it runs out of ore.

Other base metals like iron ore and copper have enjoyed sustained high prices, and that's led to replacement and expansion of depleted supplies. Miners have invested in the exploration for new resources, the expansion of existing projects, and the building of new mines, all justified by profits.

By contrast, there's a dearth of new zinc projects coming on-stream to replace all that lost production. It seems the last several years of subdued zinc prices have discouraged miners from developing new projects.

Rubbing salt in the proverbial wound, some of the larger planned zinc mines are facing serious delays. Only a few months ago China's Minmetals, operator of the Dugald River project in Australia, said it was "unlikely that the previously announced schedule of a first concentrate shipment in late 2015 will be achieved."

Glencore's Maté said he believes that "more than 2 million tonnes of new supply is needed by 2016. There is a real shortage of quality projects in the pipeline which are anywhere near ready for production."

His sentiment was confirmed by Richard Davis, mining-fund manager with Blackrock Inc., saying "There could be quite a big gap opening up between supply and demand."

Meanwhile, above-ground zinc stocks are depleting quickly.

A year ago, London Metal Exchange registered warehouses held 1.2 million tons of zinc. That has dropped nearly consistently since, but then more precipitously in the last 4 months.

After depleting by nearly 32%, inventories now stand near 820,000 tons, as you see in the chart.

For its part, Barclays raised its zinc price outlook for 2014, based on expectations of stronger demand for industrial metals.

China, which accounts for 43% of refined zinc demand, saw net imports rise 20% in the first 10 months of 2013.

And galvanized steel, crucial to the automobile industry, is in high demand, as demonstrated by Mitsui's massive 70% price increase for zinc products.

The Profit Surge Will Have Legs
A recent survey by IHS Automotive forecasts the global auto industry will witness 85 million unit sales in 2014, up from 82 million last year. They expect sales to break the 100 million unit milestone by 2018.

Given that the average automobile uses about 37.5 pounds of zinc for everything from rust-proofing to door handles and even tires, demand for zinc is likely to drive higher prices.

We could see zinc prices break out above their five-year resistance and trade above $1.20 within the next 12 to 18 months.

Over the past few years, my Real Asset Returnssubscribers enjoyed, among others, 51%, 55%, and 73% gains in industrial metals plays, and opportunities are setting up for more in the zinc space.

Constrained (and perhaps even falling) supplies, combined with growing demand for all things zinc-related, are conspiring for higher prices over the next months and likely even years.

Demand's rising. Supply's down. Zinc prices, and profits, are about to take off.

Source : http://moneymorning.com/2014/02/18/workhorse-metal-ready-breakout/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a finan

cial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules