Zinc and lead pricing seems to have bottomed and are looking more positive, with higher lows vs. 2016 (weekly charts):
LME warehouse levels have declined over the same period, also suggesting that the 2018 correction occurs within a greater uptrend (although LME levels have been dropping since a peak in 2012):
Professional commentary: Zinc "Ioannou said that at Cormark, a price prediction of US$1.35 a pound (US$2,976.2 a tonne) is the average for the next year going forward, a price he said is “somewhat conservative.”“We’re down into sort of a 120,000-tonne range on the LME right now. And quickly approaching 100,000 tonnes, and when you add up the visible supply that’s out there right now, we’re down to half a week of global consumption, which I think for argument’s sake is pretty critical already.”“[The] last time we saw zinc inventories on the LME below 100,000 tonnes, the zinc price spiked to US$2 a pound [US$4,409.24 a tonne] … I think just based on that supply concern, I think if we see any waning in the Trump trade war narrative and people start to take a closer look at what the visible inventories are telling them … we could see prices spike significantly next year,” he said. Given her feelings on the supply crunch coming to an end, CRU’s O’Cleary was understandably more conservative, pegging the zinc price for 2019 at US$2,450, “with an uptick in 2019 Q1 giving way to falling prices for the rest of the year as the refined market returns to balance.” Wood Mackenzie’s Thomas was closer to Ioannou’s sentiments. “We forecast double-digit growth in Chinese smelter production in 2019,” he said.“It’s important to understand that even if this is achieved, the metal market is still forecast to experience further declines in stocks and remain in deficit. As a consequence the price is projected to revisit, and potentially exceed, the highs seen in February [2018].” As mentioned, Junior Stock Review’s Leni believes a spike in price is on the cards due to low inventories — though that could be soured by any resolution to the trade war."
Lead "Lead-specific factors aside, investors should keep an eye on the broader metal price drivers that have pushed and pulled LME lead prices around in 2018,” said Hawkes.“Namely a further escalation (bearish) or hopefully de-escalation (bullish) in US-Chinese trade tariff wars and how much longer renewed US dollar strength can last. Price movements in other LME metals, particularly LME flagship copper and sister mining metal zinc (both expected to fall in 2019), will also influence lead price direction,” he said.“Ultimately we think that the LME lead price will post fresh lows in 2019, with the full year averaging US$1,925, the first sub-US$2,000 outcome since 2016.” Over at FocusEconomics, analysts polled were a mixed bag on prices.“Improved supply and demand dynamics in winter months and still-solid demand for lead-heavy vehicle batteries should support lead prices in the coming quarters. Moreover, the recent easing in tensions between the US and China could bode well for prices going forward,” the analysts said.They see prices averaging US$2,251 per metric tonne in Q4 2019, and US$2,237 in Q4 2020. For 2019 as a whole, the analysts posted a consensus forecast of US$2,221 through the year, with the lowest forecast coming from Liberum Capital, which predicts a price of US$1,834. The most bullish prediction is from Fitch Solutions, at US$2,500."
2019 price predictions: Zinc $2400-4400, av. $3000 Lead $1834-2500, av $2220 more or less agrees that the bottom is in (the lower predictions align with the chart support levels), the question is how much upside?
TKM Price at posting:
0.9¢ Sentiment: Buy Disclosure: Held
