Aluminium and zinc expected to outperform in last quarter of this year; here’s why

The metal prices and metal stocks continue to gain. The latest trigger in the space has been a statement from China where it says it will allow floating electricity prices to rise from October 15. It will help all the energy-intensive metal prices surge and that is exactly what is happening. Nearly 40 percent of the cost of aluminium production is electricity.

Inventories have continued to decline. Overall global aluminium inventories as of now are at the lowest since March 2020 and the markets do believe that there can be further gains from here on in this year itself. One can expect an all-time high coming in for the commodity.

The other commodity that has run up in the metal space has been zinc. It is at two-and-half years high. If one looks at Asia and Europe LME inventories, they stand at nearly 2,350 tonnes, which is not even sufficient for four days of global consumption.

For September, it was expected that the demand will continue to decline. But, in October, November, and December; there could be 4.3 percent surge in case demand is supportive.

Forecasts in this space are going up. Fitch, World Bank, and IMF all have come up with the latest price forecasts for zinc and they are expecting the commodity at 2,700 to even 2,900 on the higher side, going forward.

So within the metal space, these two metals are expected to outperform in the last quarter of this year.