Zinc, Nickel to ‘Perform Very Strongly’ Over Next Two Years

The Financial Post reported that Mike Bandrowski, an analyst at Clarus Securities, has published a note in which he states that zinc and nickel will “perform very strongly” in the next couple of years. He sees falling inventories as a big part of the story.

As quoted in the market news:

In the case of zinc, Mr. Bandrowski noted the market is already in deficit, and that deficit should get bigger following the closures of the Lisheen and Century mines this year. He said exchange inventories have fallen by more than half over the last two years and should be at ‘critical’ levels later in 2015.

Nickel has received more attention than zinc due to an Indonesian export ban on raw ore that was imposed a year ago, which removed about 25% to 30% of global nickel supply. The nickel price spiked following the ban, but fell back to earth as inventories dramatically increased.

Mr. Bandrowski’s said the inventory spike was partly due to a well-publicized trading scandal in Qingdao, which created disruptions in Chinese nickel stockpiles. He expects inventories to trend lower in early 2015 as Indonesian stockpiles are exhausted in China, and thinks the market is heading toward deficit this year.

‘We see a great opportunity for nickel in 2015,’ he added.

Click here to read the full Financial Post report.