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Subject

Zinc market outlook.

Significance

Zinc has been the best-performing base metal over the past two years. Robust demand from China, falling inventories and a second year of reduced supply from mines have pushed up prices by nearly 90% since the beginning of 2016.

Impacts

The proportion of zinc in mineral deposits being mined will likely fall to less than 5% in 2018, putting further pressure on supply.

Market leader Hindustan Zinc's locking in of prices for 25% of its output implies it expects price volatility.

'Rebalancing' of China's economy could slow the country's demand growth to 0.6% annually in coming years.

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