Scotiabank’s Mohr Sees Zinc Hitting US$1.25 in 2014

Mineweb reported that Scotiabank economist Patricia Mohr sees zinc prices rising to US$1.25 this year, then hitting $1.60 to $1.70 next year. She believes Teck Resources Ltd. (TSX:TCK.B,NYSE:TCK), Lundin Mining Corp. (TSX:LUN) and Hudbay Minerals Inc. (TSX:HBM) will benefit.

As quoted in the market news:

In her analysis, Mohr observed that a cyclical recovery is zinc and nickel is underway.

‘Global supply and demand conditions for ‘refined’ zinc are in ‘deficit’ in 2014 (that is, world consumption of slab zinc exceeds production), pulling down LME & Shanghai Futures Exchange stocks by 20.8% since late 2013,’ she noted. ‘Chinese imports of ‘refined’ zinc have jumped by 39.3% through July, given solid underlying demand growth—up about 7% in 2014, boosted by strong auto production (+9.4% YTD), the rising content of galvanized steel in cars to prevent rust (Chinese consumers are demanding higher-quality motor vehicles) and low operating rates at Chinese smelters (74%) due to weak treatment charges & poor profitability.’

Meanwhile, Mohr advises that while zinc concentrate supplies remain ample, ‘concentrates will likely also move into deficit by 2016, given significant mine depletion—for example, at Australia’s 480,000t Century mine in mid-2015, the world’s third-biggest zinc mine, and at Lisheen (132,000t) in 2016, after closures in 2013 at Brunswick (190,000t) and Perseverance (125,000t) in Canada.’

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