Fund managers have been scaling up short positions on zinc, betting that this year’s weakest base metals price performer has further downside.
The global zinc market is generating a lot of surplus metal, some of which has just turned up in LME warehouses, lifting stocks to the highest level since June 2021. It’s worth noting that “other financial institutions”, covering index providers and insurance players, are still net long of zinc but at much reduced levels relative to the 2018-2021 period.The accumulation of speculative bear bets on the London zinc contract has played out in tandem with fast-rising LME warehouse stocks.
The International Lead and Zinc Study Group estimates the global refined zinc market notched up a 204,000-ton supply-usage surplus last year and its most recent forecast in October was for an even bigger 367,000-ton glut this year.