LONDON METALS EXCHANGE ZINC ETF:   LME | ZINC

As 2016's top performer of the 22 raw materials tracked by the Bloomberg Commodity Index, zinc has been making history in the metals exchange. There is now tremendous excitement in the zinc market with prices up 60% this year from a six-year low in January as supply constraints loom in both concentrates and refined metal.

THE WORLD NEEDS ZINC.

ZINC: THE BULLISH EXCEPTION AMONG METALS - GOLDMAN SACHS, 2016

Goldman Sachs has forecast a 114,000 ton shortage of zinc this year, which will widen to 360,000 tons in 2017. As the deficit widens, prices will ascend. Goldman expects zinc could hit $2,500 per metric ton in six months.

ZINC: THE BULLISH EXCEPTION AMONG METALS - GOLDMAN SACHS, 2016

Zinc prices could go higher following the announcement in August 2016 of several mine closures by China, the world's largest zinc producer. Beijing ordered the shutdown of all lead and zinc mines in parts of Hunan province, the center of Chinese production, until next June because of safety and environmental concerns. Bans on lead production are being extended to at least seven other provinces.

RISING DEMAND

RISING DEMAND

We view zinc as the bullish exception in the metals space and remain very bearish on the outlook for other base metals prices. In the second half of 2016, Zinc has by far the most bullish supply-side dynamic.

AND, "NO SIGNS OF SLOWING"

AND, "NO SIGNS OF SLOWING"

As zinc’s rally shows no sign of slowing down anytime soon, miners are rushing to find new zinc reserves with the closure of many mines contributing to the fall in zinc supplies. While the rush is on, it will take years for new zinc mines to come online, and in the meantime, those miners who can find the best deposits, with the shortest ramp-up time could see their stock value soar. Even better positioned are those miners who can expand their current zinc reserves. Zinc is often deposited in conjunction with other base metals. Miners would be smart at looking into turning their focus to zinc to capitalize on the current price rally.

ZINC IN USE

More than 13 million tons of zinc was produced in 2013 worldwide. Sixty percent of this is used for galvanizing to protect steel from corrosion thus prolonging the service life of steel products significantly. Approximately 15% goes into the production of zinc base alloys, mainly to supply the die casting industry, 14% goes into the production of brass and bronze and 8% into the production of compounds including zinc oxide and zinc sulfate. The remainder is zinc alloys, mainly rolled, utilized in semi-manufactured applications including coinage and architectural applications..

These first-use suppliers then convert zinc into in a broad range of products. By far the largest application area is construction with 45% of all first-use zinc products used in this area. The transportation sector consumes 25% of global zinc consumption and consumer goods – including electrical and electronic appliances – accounts for 23%. The remaining 7% is used for the manufacture of industrial machinery.

ZINC IN USE

THE WORLD NEEDS ZINC

-GOLDMAN SACHS (2016)  | VIEW THEIR FULL ZINC REPORT HERE >

GOLDMAN SACHS (2016)
VIEW THEIR FULL ZINC REPORT HERE >

AMIDST A GLOBAL SUPPLY SHORTAGE

Goldman Sachs has forecast a 114,000 ton shortage of zinc this year, which will widen to 360,000 tons in 2017. As the deficit widens, prices will ascend. Goldman expects zinc could hit $2,500 per metric ton in six months.

The resulting squeeze in zinc supplies has particularly affected China, which is both the world's largest zinc consumer and its largest producer, with 4.9 million tons of output in 2015. Chinese manufacturers are now being forced to import zinc for use in cars, household appliances, paints, rubber products and smartphones.

Australia is the world's second largest zinc producer, according to the U.S. Geological Survey, at 1.58 million tons last year. Its output will fall this year because of the Glencore cuts, analysts said. Peru is third with 1.37 million tons. Asian producers include fifth-ranked India with 830,000 tons and eighth-ranked Kazakhstan with 330,000 tons.

AMIDST A GLOBAL SUPPLY SHORTAGE

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