MUMBAI (Commodity Online): Zinc prices ended the year 2013 on a positive note and considering its promising fundamentals, the metal is amongst the best recommendations for gains in 2014, according to Religare Commodities in a Commodities Yearly Outlook released last week.
Zinc was well supported by solid demand from China and was the best-performing industrial metal as investors bet mine clousres would transform an oversupplied market into one facing a deficit. Global zinc market was in deficit by 2000 tons in the first 10 months of 2013, Religare report said.
Zinc has been burdened by overproduction and high inventories, but the clo-sure of major mines, including Century in Australia, is expected to tighten the equation. Korea's exports of metal dropped 4.5 percent to 280,953 tons from January through October from a year ago as per the data from the Korea International Trade Association showed.
The latest forecasts supplied by the ILZSG indicate that global supply of refined zinc metal will exceed demand by 115,000 tonnes in 2014.These are lower than the surplus-es in the past four years.
Global refined zinc metal output is forecast to grow by 3.4% to 13.01 million tonnes in 2013 and by 4.9% to 13.65 million tonnes in 2014. This will be mainly influenced by higher output in China, as well as increases in India, Italy, Peru and Korea. In India, output will be mainly driven by a rise in production at the Rampura Agucha mine. In Africa, production will be boosted by the new Perkoa mine in Burkina Faso. European demand is forecast to fall for the second successive year in 2013 alt-hough, at 0.8%, the extent of the reduction would be small. In 2014, an expected 3.8% rise would be primarily due to antici-pated growth in Belgium, Italy and Poland. In the United States, it is expected that demand would increase by 7.1% this year and by 1.2% in 2014. Elsewhere, demand is forecast to rise in Brazil, India and Turkey and to remain stable in Japan and the Republic of Korea, as per ILZG, Religare report added.
Price Analysis and Outlook
Zinc prices rallied froma low of Rs 105.90 per kg at India's Multi Commodity Exchange last year to 136.90 per kg in the month of August 2013. At LME, prices formed a strong base at $1750-1800 and look poised for a rally in the coming months.
"We therefore recommend traders to accumulate long positions in zinc in the range of Rs115-118/Kg, keeping an eye on the strong support pegged around Rs112/Kg too. From a medium term perspective targets of Rs142/kg can be eyed upon, beyond which the coun-ter can further jump towards Rs165/kg as the next level to test." |
