This Is The Only Metal Seeing Good News

There hasn’t been much overt good news for the metals lately. Investors sentiment has been distinctly sour over gold, iron ore and even copper.

Except for one commodity, which has been bucking the trend. Zinc.

A number of analysts have gone on record saying that 2014 could see significant gains for zinc metal. And news yesterday out of Asia provided further positive indications in this regard.

Bloomberg reported that major Japanese producer Mitsui Mining & Smelting is increasing rates for the zinc products it sells.

And not just a little. Mitsui is apparently raising its charges by a full 70%.

The charges are premiums levied by Mitsui to zinc buyers, above and beyond the LME zinc price for current delivery.

Sources didn’t give any dollar values on the increase. But 70% is a very significant rise. Last year, Mitsui was only able to raise the rates by 15%.

All of which suggests that zinc demand–especially in Asia–has grown significantly of late. And that supply is getting harder to find.

Zinc bulls argue that trend is just getting started. With several high-profile mine closures due to reduce zinc supply over the next few years.

This is some of the first real evidence that such developments may indeed be moving market prices. LME zinc rates had staged a brief rally in December, rising over 10%. But much of those gains has been erased during the last two weeks, as zinc has subsided back to below $0.90 per pound.

We’ll see if price increases like Mitsui’s translate into renewed strength for the more-visible LME rates. Any upward movement will be hailed by supporters as proof of a coming zinc bull market–and could garner a lot of momentum in metals prices and share prices of producing stocks.

Here’s to the good-news metal,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

 

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