Zinc prices extended a run of 10-year highs to above $3,400 per tonne in early January. Glencores December announcement that it is restarting the Lady Loretta mine, idled in 2015, did little to derail bullish sentiment, even though it came shortly after confirmation that the Century mine in Australia will be reopened. The market seems relieved that Glencore, at least, is taking a piecemeal approach to resuming operations at Lady Loretta. We had already assumed a staggered restart program so are surprised by the relief rally in prices. We remain surprised at how the relief rally has uncovered follow-through buying momentum, which has overwhelmed the forward-selling that had previously capped the upside to prices. In view of this strong start to the year and the fact the underlying fundamentals remain tight for now, we have raised our LME cash price forecasts for Q1 2018 by $300 per tonne to $3,200 per tonne. But our fundamental view remains that zinc prices will tail off over the course of the year.
Analysis by Andy Cole, base metals analyst and editor of MBRs Base
Metals Weekly Market Tracker. Email: email@example.com
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