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

Zinc Trends: 2016 in Review

Zinc Trends: 2016 in Review

A look back at what happened in the base metal's market this year.

Zinc remained a top pick from banks and analysts alike and was the best-performing LME metal in 2016. After a rocky start this year, when prices hit a seven-year low reaching $1,460 per tonne in mid-January, zinc prices were up by 25 percent by the end of the first quarter.

According to Reuters at the time, the rise came as “speculators piled back into the market on hopes more production cuts would lead to shortages”. Prices for zinc and other base metals were also buoyed by expectations of more economic stimulus measures from China.

The metal, used to galvanise steel, has gained nearly 90 percent since January and reached a nine-year high on November, touching $2,985 per tonne.

Here, INN looks back at what made the base metal hit multi-year peaks in 2016 as analysts and CEOs forecast a strong year ahead.

Tight Supply and Further Production Cuts

The International Lead and Zinc Study group estimated in their last report that the market will remain in deficit with a shortage of 248,000 tonnes for 2016.

Throughout the year, the closure of major mines such as Century and Lisheen in 2015, that together produced approximately 0.6 million tonnes of mined metal, had a big impact on supply.

Production cuts from other mines, including Glencore (LON:GLEN) and Nyrstar (BRE:NYR) also allowed prices to surge.

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