RE: Zinc15 Jul 2018 12:42
Iron ore, steel and aluminum may be high-demand base metals like zinc, but zinc has an attractive advantage for investors: Supply is fantastically tight and stockpiles are diminishing at a rapid pace.
China is the world’s biggest user of zinc. That’s because China spends more money on infrastructure than the U.S. and Europe combined. Last year alone, China spent $2 trillion investing in its infrastructure, and that number is growing by $300 billion each year.
Stockpiles are at multi-year lows and demand remains relentless. The supply squeeze is on, with China going through record amounts of zinc, India experiencing massive growth, and America planning to spend billions on infrastructure and military defense projects, zinc - more than at any time in history, is noticeably becoming the go-to metal.
In 2016, zinc demand became greater than the available supply for the first time in a decade. Accordingly, the price of zinc shot up over 97%. It’s interesting to note that during zinc’s last bull market run from 2004 through 2007, zinc prices rose 63% in 2005. The biggest gains actually happened in the following two years with zinc prices increasing 286%. These returns bested the first year’s gains by more than 4 times. Zinc miners saw their stock prices surge even more, with some companies advancing over 400%.