Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Zinc, the "Workhorse" Metal Is Ready for a Price Breakout

Commodities / Metals & Mining Feb 18, 2014 - 01:54 PM GMT

By: Money_Morning

Commodities

Peter Krauth writes: It's not surprising that precious metals get the most attention.

They're considered "precious" thanks to their scarcity, beauty, and history as a store of value.

That's all true. But industrial metals do the really hard work.

There's one base metal used worldwide to produce rustproof steel, in a variety of alloys, and even as a health supplement. It's not often spoken of as a great addition to your investment portfolio.


Here's the thing: It's poised to break out of a low multi-year price range and challenge the better-known metals in producing profits.

In fact, a stunning rally is in the works... and a great opportunity to seize an upside that others will miss, blinded by focusing on this metal's shinier counterparts...

The Double-Digit Returns Are Already Starting
Since the 2008 financial crisis, zinc prices had remained relatively quiet. Meanwhile, copper and gold have since managed to set new highs.

Then last fall things started to change, with zinc prices seeing some impressive action. Zinc shot up from $0.84/lb. to $0.96/lb. from mid-November to early December.

That was a 14.3% gain in just three short weeks. That move led the metal out of a tight trading range between $0.81 and $0.89 that lasted for most of 2013.

We've seen a small pullback and bounce since then, but there are increasing signs that this trend is just getting started.

Bullish Economic Signs
According to a recent report from Bloomberg, "Mitsui Mining & Smelting Co., Japan's top zinc producer, raised annual charges to overseas buyers by as much as 70% amid rising Chinese consumption, up from a 15 percent gain last year." Asian demand appears to be garnering momentum on supply constraints.

Morgan Stanley is forecasting a wider global deficit this year.

What could be stimulating zinc prices like this? In two words: supply and demand... simultaneously.

On the supply side, a number of significant mine closures are going to limit zinc resources for the next several years. Head of zinc trading at Glencore Xstrata, Daniel Maté, told investors recently,"There is likely to be a structural deficit in the zinc market in the short to medium-term future."

Xstrata's own Canadian mine, Brunswick and Perseverance, was shut down in 2013. Later this year, Vedanta's Lisheen mine in Ireland is also expected to close. Even the world's third-largest zinc mine, Century in Australia, is likely to see its last production by mid-2105 as it runs out of ore.

Other base metals like iron ore and copper have enjoyed sustained high prices, and that's led to replacement and expansion of depleted supplies. Miners have invested in the exploration for new resources, the expansion of existing projects, and the building of new mines, all justified by profits.

By contrast, there's a dearth of new zinc projects coming on-stream to replace all that lost production. It seems the last several years of subdued zinc prices have discouraged miners from developing new projects.

Rubbing salt in the proverbial wound, some of the larger planned zinc mines are facing serious delays. Only a few months ago China's Minmetals, operator of the Dugald River project in Australia, said it was "unlikely that the previously announced schedule of a first concentrate shipment in late 2015 will be achieved."

Glencore's Maté said he believes that "more than 2 million tonnes of new supply is needed by 2016. There is a real shortage of quality projects in the pipeline which are anywhere near ready for production."

His sentiment was confirmed by Richard Davis, mining-fund manager with Blackrock Inc., saying "There could be quite a big gap opening up between supply and demand."

Meanwhile, above-ground zinc stocks are depleting quickly.

A year ago, London Metal Exchange registered warehouses held 1.2 million tons of zinc. That has dropped nearly consistently since, but then more precipitously in the last 4 months.

After depleting by nearly 32%, inventories now stand near 820,000 tons, as you see in the chart.

For its part, Barclays raised its zinc price outlook for 2014, based on expectations of stronger demand for industrial metals.

China, which accounts for 43% of refined zinc demand, saw net imports rise 20% in the first 10 months of 2013.

And galvanized steel, crucial to the automobile industry, is in high demand, as demonstrated by Mitsui's massive 70% price increase for zinc products.

The Profit Surge Will Have Legs
A recent survey by IHS Automotive forecasts the global auto industry will witness 85 million unit sales in 2014, up from 82 million last year. They expect sales to break the 100 million unit milestone by 2018.

Given that the average automobile uses about 37.5 pounds of zinc for everything from rust-proofing to door handles and even tires, demand for zinc is likely to drive higher prices.

We could see zinc prices break out above their five-year resistance and trade above $1.20 within the next 12 to 18 months.

Over the past few years, my Real Asset Returnssubscribers enjoyed, among others, 51%, 55%, and 73% gains in industrial metals plays, and opportunities are setting up for more in the zinc space.

Constrained (and perhaps even falling) supplies, combined with growing demand for all things zinc-related, are conspiring for higher prices over the next months and likely even years.

Demand's rising. Supply's down. Zinc prices, and profits, are about to take off.

Source : http://moneymorning.com/2014/02/18/workhorse-metal-ready-breakout/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a finan

cial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in