Zinc prices at 3-year high, here’s what brokerages have to say

Metals are actually reacting to their individual fundamentals. Overnight, it was a relief rally. We saw almost all metals gain up and zinc also hit a 3-year high. It is back above $3,000 per tonne. We have seen the prices gain up by 10 percent in this year, nearly 45 percent up in the last 12 months, and the prices until now in this year have averaged $2,825 a tonne.

Zinc has stronger demand continuing as is the case with steel as well, and with the steel prices rising, the galvanising demand also has been quite decent there.

So for this year, we have seen Fitch Solutions raise price outlook for zinc to around $2,900 tonne. This is an average price, but for the next year, they are not so bullish for zinc. They actually have given a downward revision at around $2,600 per tonne, nearly $300 less than what they are looking at zinc prices averaging in this year.

World Bank also is forecasting zinc prices to average at $2,700 per tonne this year, you have International Monetary Fund (IMF) saying that $2,828 is what they are looking at in sense of zinc prices by the end of this year. So, we are looking at the same range.

Other interesting data point is the International Metals Study Group, they expect the zinc global supplies to increase by 5.7 percent in this year. The refined zinc production or supplies could increase by 3.1 percent. While you look at the demand expectation, that is expected to gain by 4.3 percent. So, we clearly are not in deficit for the second half of this year when it comes to zinc.

Even as this year could be quite supportive for zinc, as we have seen with regard to prices from almost everybody, right from Fitch Solutions to World Bank to IMF, they are projecting lower prices of zinc in the longer term starting from 2022 to at least until 2024. They do not expect zinc to play a very big role. It is not a part of renewables or the greener energy, so zinc demand is expected to decline, going forward.

: Bullish on metals space; expect higher levels on Tata Steel: Rakesh Arora