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Zinc kicked off the new year in style by hitting a fresh 10-year high.

Benchmark LME zinc rose as high as $3,352 per tonne on Tuesday (January 2) before ending the day up 0.9 percent, at $3,349. According to Reuters, that’s the base metal‘s highest level since August 2007.

“Demand growth is decent, but not spectacular from a historical perspective, which tells me this is once again a supply side issue,” said Bernstein analyst Paul Gait.

Supply-side issues also drove zinc in 2017. Prices crossed the $3,000 mark during the summer and ultimately surged nearly 30 percent over the course of the year. Falling stockpiles and lower mine supply both played a role in keeping the market undersupplied during that time.

The key question now for market watchers is whether prices will continue to rise in 2018.

So far, experts seem to be calling for more stability this year. For instance, while Reuters notes that zinc stockpiles in LME-approved warehouses are currently down 70 percent since September 2015, sitting at just 180,975 tonnes, new mine supply is seen boosting supply.

CRU Group analysts expect around 775,000 tonnes of new zinc mine supply to come onstream next year, with MMG’s (HKEX:1208) Dugald River mine and Vedanta’s (LSE:VED) Gamsberg mine being notable contributors to production.

East Siberian Metals’ Ozernoye field project and Mehdiabad mine are also expected to bring new production to market between 2018 and 2022. What’s more, major miner Glencore (LSE:GLENrecently announced plans to gradually bring some output back online after making cuts in 2015.

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MARKET SUMMARY

INDICES

Name Last Change
DOW 24462.90 0.83%
S&P 500 2670.14 0.86%
NASDAQ 7146.13 1.29%
TSX 15484.32 0.19%
TSX-V 804.96 0.00%

Resource Commodities

Name Last Change
Gold 1335.59 0.75%
Silver 17.13 0.76%
Copper 3.13
Platinum 926.88 0.000
Oil 68.38 0.13%
Natural Gas 2.74 2.88%
Uranium 24.25 N/A
Zinc 1.47 0.00%

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