Trade War Sparks Zinc Demand

Many industries are experiencing downward pressure amidst concerns of a global trade war, but the zinc market looks set to trend upwards. Already hitting a decade-high earlier this year, TD Securities is now “bullish” on the outlook of zinc prices. The investment bank has just revised its forecasts for the next two years, raising its 2019 estimate to US $1.75 a pound and 2020 estimate to US $1.50 a pound. The new import restrictions could now send the U.S., the world’s largest steel importer, into a demand frenzy for zinc, especially from its neighbor, Canada. The U.S. already imports 16% of its steel from Canada, but U.S. manufacturers could urgently look to replace 75% of the steel that they import from outside the continent to avoid extra costs. This could ignite a demand surge for Canadian zinc. Zinc prices already hit a ten-year high earlier this year, but that may be just the beginning. Analysts at CRU Group forecast that zinc price will reach another peak by mid-2018, averaging US$3,750 per tonne in Q2 and US$3,340 for the year. Similarly, Citi analyst Max Layton expects a jump in prices to around US$3,800 to US$4,000 per tonne. “The zinc price in the next three to six months is the best we’re going to see for the next three to five years,” he said. While zinc producers are set to embrace potentially higher investor interest this year, Canadian zinc stocks could see potential significant growth potential.