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Zinc prices have continued to trade in a down-channel since peaking in February, and that trend arrived at the psychologically significant $3,000 per tonne level in May, where there has been a good attempt to consolidate. Interestingly, there was a similar down-channel to zinc prices during February-June last year.

Ultimately, that turned out to be a continuation pattern within zinc’s impressive multi-year up-cycle. Prices broke higher and went on to score fresh highs later last year and again earlier this year.

While it is not presently our base case, we would not rule out the current down-channel being the precursor to another up-swing in the multi-year bull market. While we have recently adjusted our Chinese supply-demand forecasts for 2018, which has reduced the global deficit to 235,000 tonnes – around half of last year’s supply shortfall – inventories will still be drawn down again this year, which should continue to underpin prices. Our Q2 average price forecast is $3,100 per tonne.

Analysis by Andy Cole, Metal Bulletin Research

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