Headwinds to the current zinc price rally are expected to mount during the second half of the year as consumption slows, undermining the base metal’s strong fundamentals, new analysis by Bank of America Merrill Lynch (BofAML) has found.
The banking group’s Global Commodities Research team said in its latest ‘Global Metals Weekly’ report that a rebalancing of the zinc market has been visible in the usual indicators in China: mine supply has remained subdued partially because the government made restarts difficult; smelters are running at capacity utilisation rates of lower than70%; and refined zinc prices on the Shangai Futures Exchange (SHFE) have outperformed those on the London Metals Exchange (LME), opening the import arbitrage and as a result, refined zinc shipments to China have rebounded.
