Zinc Market Analysis

摘要

After breaking down through 1,600 dollars/ tonne, we thought zinc would find support at the level of its long term uptrend, around 1,510 dollars/tonne. It might have done in other circumstances, but the collapse in confidence across the financial markets prompted distress selling and zinc actually plunged below 1,200 dollars/tonne. At this level, nearly 50 percent of mine capacity is either in the red or only breaking even. With the demand outlook remaining decidedly dull outside China, the key factor for zinc now is how much more mine capacity can survive. More cuts are surely coming, which should ensure a base trading range for zinc around 1,000-1,600 dollars/tonne for the next six months or so, with the greater downside risks seen sooner rather than later. Given this lower price base, our forecasts have been lowered again this month.