Global zinc short-term outlook January 2018

The zinc price made a decisive break upwards in January to touch a high of $3608/t, after spending much of the final quarter of 2017 hovering around $3200/t. The move higher was driven by renewed enthusiasm amongst investors. Commodity prices have been given an additional boost by expectations that the US government maybe in the process of disengaging from the "strong dollar" policy that has been a mainstay of successive US administrations for the past 25 years. Zinc fundamentals remain supportive of higher prices, with exchange stocks at their lowest level for 10 years. The potential under performance of smelters globally, and in China in particular, is a significant upside risk to the price outlook for 2018. For 2019 and 2020, smelters remain a key risk to the outlook as issues of increasing smelter utilsation rates transition into the need to construct new smelter capacity.