Monday December 17, 2012, 4:15am PST

By James Wellstead2 - Exclusive to Zinc Investing News3

How Long Will Zinc Prices Rise?6Cash prices for London Metal Exchange zinc closed at $2,059/tonne on Wednesday, up 7.7 percent over last month and 13.7 percent higher compared to the end of October.

Recent developments in China, including an apparent return in manufacturing activity and a rise in cancelled warrants, have helped boost zinc prices in China and internationally.

Metal Bulletin noted7 that zinc output in China also rose, gaining 453,000 tonnes in November, a 7.3-percent improvement from September, according to data released by China’s National Bureau of Statistics.



Recent short-term improvements have been a welcome development in light of this year’s general trend.

The international Lead and Zinc Study Group released9 zinc demand numbers for the 10-month period of January to October this year; they show that there has been a 2.8-percent fall in demand over the same period last year.

Zinc metal surpluses have fallen to 157,000 tonnes from 304,000 tonnes in 2011. Over the same period, overall mine output increased by 789,000 tonnes.

Demand for zinc will be highly contingent on a number of major centers, including the emerging BRIC countries10, where much infrastructure building will occur.

A report11 from research and consulting firm Wood Mackenzie states that 2013 will be an “inflection point” for Chinese metal demand, meaning that it will become clear as to whether or not the country’s recent economic slowdown is a successfully managed transition into a new phase of economic development.

Over the long run, zinc is still expected to outperform most metals. Resources analyst Allan Trench of CRU recently classified12 the three-year mining outlook as “UPTZ” due to expected rises in prices for uranium13, palladium14, tin15 and zinc.