There has been little buying from the LME this quarter and there is no doubt that buyers have been staying away. But China needs to restock at some point. The fact that they are buying zinc now in Shanghai at a premium of $1.10 vs LME prices at $0.90, suggests that demand is picking up a bit there.
However, it might not pick up until from either April 01 on the LME or even June. Chinese buyers are very astute. They will not restock until zinc prices hit lows or they almost run out of stock.
New production this year slightly outweighs mines going offline by 250,000t, so that may be finding it way onto LME warehouses. In 2013, this balances out though with a loss of -150,000t of supply. It's this that will limit the downside to zinc prices in the immediate future, not present stock levels so much.
KZL Price at posting:
13.5¢ Sentiment: Buy Disclosure: Held
