Will Zinc Continue Rising for Rest of 2014? SMM Interviews

SHANGHAI, Nov. 13 (SMM) – Zinc price outshines other metals so far this year, with SHFE zinc gaining over 10%. Will this strong momentum continue into the rest of 2014? 

It is generally believed that concerns over ore supply disruptions boosted zinc prices. 

“The speculation over ore shortages is one reason, but the tightness of refined zinc is now playing a bigger role,” an analyst from Shanghai CIFCO futures told SMM in a recent interview. 

Another analyst from Guosen futures echoed her views in SMM interview, saying high premiums in China’s spot market since 4Q illustrates the shortfalls. 

On Nov. 12, premiums of #0 zinc over SHFE 1510 zinc contract reached as high as 280-370 yuan per tonne in Shanghai market, according to SMM data.  

“The stringent environment protection inspections since the start of the year have prohibited Chinese zinc smelters from rising output significantly,” he said, serving as a hidden factor behind zinc price rises. 

The recovery in demand and the unfavorable SHFE/LME zinc price ratio for zinc imports have also supported zinc prices, he added. 

“Zinc market remains very attractive to investors, and it is sensitive now as the adjustment for commodity fund index positions is around the corner,” he said, which will provide a new impetus for zinc price. 

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