Zinc highlights

摘要

Overall, it has been a quiet few weeks for zinc in terms of market developments. Most of the action has been on the price chart. For some time we have been appreciating the almost text-book formation of a triangle or flag-shaped consolidation pattern over the summer months, and we have warned that such patterns typically end in a sharp breakout. Concerns over a weaker economic outlook, especially for the US, and some signs of easing tightness over the quiet summer holiday period made a lurch to the downside a possibility at times, but our recommendation has always remained that this period of consolidation would end in an upside break-out. As it happened, zinc followed our script exactly, breaking out of the consolidation triangle in the first week of September and rallying strongly. From the break-out point at around 3,400 dollars/tonne, official three-month prices reached as high as 3,670 dollars/tonne on September 7, which was comfortably above the initial overhead target of 3,600 dollars/tonne. The fact that the move was accompanied by high volumes and by rallies in other metals was a bullish sign that suggested zinc's move higher was well-founded and should have staying power.