Zinc could hit $4,500/mt by end of the decade: CRU

London (Platts)--7Apr2014/829 am EDT/1229 GMT


The price of zinc could get up to $4,500/mt by the end of the decade as supply is outstripped by increasing demand, CRU analyst Helen O'Cleary said Monday.

The analyst -- speaking at the Metal Events 6th International Zinc conference in Dubai -- said that supply is likely to be outpaced by demand leaving a hole in the market propelling zinc to the lofty highs last seen in 2006/2007 of around $4,000-4,500/mt.

Three-months zinc priced on the London Metal Exchange closed the April 4 kerb session at $2,004/mt, it opened January 2, 2014, at $2,060/mt.

O'Cleary said that in the space of five years demand will run ahead of supply pushing the metal closer to "pinch point."

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For 2014 the analyst said the price is likely to remain fairly flat, but didn't rule out the chance of some near-term rallies.

Looking at China, currently the world's biggest zinc consumer and producer, the analyst believes that over the 5-year period Asia [ex-China] will over take the country in terms of demand.

O'Cleary sees the global zinc market being roughly in balance in 2014 with a modest deficit in 2015. However, in the absence of fresh mine supply "enormous deficits are likely" further out she said.

O'Cleary believes that the higher price could be damaging to the market, leading end-users to look for cheaper substitutes.

Zinc's main usage is in the process of galvanising steel.

--Ben Kilbey, ben.kilbey@platts.com
--Edited by James Leech, james.leech@platts.com

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