Commodity Price Forecast - Zinc: On Track For A Modest Recovery - 02 OCT 2017

BMI View: We have raised our zinc price forecast slightly, to USD2,800/tonne, in 2017 and 2018, following stronger-than-expected economic growth in China over Q317 that has driven a sustained rally in industrial metal prices. Additionally, a tightening global refined zinc market will continue to support prices over the near term.

Short-Term Outlook (three-to-six months)

We forecast three-month LME zinc prices to average USD2,800/tonne in 2017 as we expect the price rally to lose steam towards the end of the year. Nonetheless, zinc prices will remain elevated by tightening fundamentals on both the supply and demand side. On the former, a global ore shortage and tightening environmental standards in China will continue to weigh on production growth, while a more positive near-term outlook for China's steel sector will boost the country's zinc demand. Over the first seven months of 2017, Chinese steel production increased by 5.3% y-o-y to 49.3mnt.

Upward Trend To Continue
Three-Month LME Zinc Price (USD/tonne), Weekly
Source: Bloomberg, BMI

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