Categories: Base Metals / General Market Commentary
Topics: General Base Metals / General Market Commentary

Zinc, it never rains but it pours

Zinc, it never rains but it pours

The Great Zinc Drought might be said to be broken, but those calling the end of this protracted dry spell going back to 2006 have been proven foolish before. However, this time around the degradation of the zinc mining space through mine closures, lack of a pipeline of new projects (or even old mines to reopen) and virtually zero exploration since 2011 means that the landscape is not only parched it is veritably scorched earth.

Zinc fell from about $0.90 per lb in the late ’80s to $0.40 per lb in 1993, then spent the rest of the decade constricted to a range between $0.40 and $0.55.
After the Tech Crash in 2000, it sunk below $0.40 per lb until 2003 when it began to regain traction. In 2004-5 it broke out above what appeared to be a multi-year $0.50/lb resistance and within two years quadrupled. In late 2006 it broke above $2 per lb.

If one enquires of a gold bull as to what the top performing metal of 2016 might be, they will immediately claim their own as the winner when in reality the best performing major metal is in fact Zinc. It was only a couple of weeks ago crossing the US$1 per lb threshold and it is now a long way from the US$0.67 at which it bottomed in the second half of last year.

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