LONDON (Commodity Online): The zinc market has struggled with persistent surpluses in recent years, as modest growth in demand has been swamped by an increase in supply, according to Q1 2012 Metals Review by Natixis Commodity Markets Ltd.
Natixis analysis suggests that much of this oversupply can be traced to a major inventory cycle in China, ranging from accumulation of surplus ore in 2009, overproduction of zinc in 2010 and a destocking of metal in 2011.
“With this cycle now behind us, the market looks to be in a better fundamental position in 2012, although we may need to wait until 2013 before deficits can begin to erode the substantial global stockpiles that have accumulated over the preceding six years,” Natixis added.
Against this backdrop, Natixis would expects zinc prices to advance modestly over the coming two years, with average prices of $2,225/ton in 2012 and $2,400/ton in 2013.
