Zinc Bear Market Seen Ending as Chinese Steel Gobbles Up Glut

- October 12th, 2011

Bloomberg reported that the bearish trend in the zinc market may be ending after record demand from steelmakers finished stockpiles and the price slump spurred producers to curb output.

Bloomberg reported that the bearish trend in the zinc market may be ending after record demand from steelmakers finished stockpiles and the price slump spurred producers to curb output.

As quoted in the market news:

Prices plunged 57 percent since reaching a record $4,580 in 2006 as increased production created a five-year glut. The surplus is narrowing as consumption expands to a record, and will shrink next year to its smallest since 2007, according to Morgan Stanley. China expanding at more than twice the speed of the global economy and using more steel than ever may mean shortages as early as 2014, the bank estimates.

“I’m bullish with regards to zinc over the next two to three years and even longer,” said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty., who has followed the mining industry for two decades. “Given the level of underlying demand for zinc and at the same time the fact that new reserves are not being added, there is going to be a supply side problem to emerge over the next few years.”

Click here to read the full Bloomberg report

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