Sunil Duggal, CEO of the Vedanta Ltd. unit, said that prices may rise to about $3,000 a metric ton on the London Metal Exchange in the next couple of quarters, according to Bloomberg. This sentiment is in line with our thoughts towards the rising base metal. While the supply deficit in zinc will only last a few years, it will magnify quality assets. Look for production to be expanded at some of the world’s top zinc producers and industry pros to stay focused on potential zinc mines.
Hindustan Zinc Reports 81% Increase in Net Income
Bloomberg reported this morning in Zinc Rally Set to Last as Producer Sees Best Price in Decade,
“Higher prices and an increase in output saw Hindustan Zinc on Thursday report an 81 percent increase in net income to 18.8 billion rupees ($292 million) in the three months to June.”
Certainly, Hindustan Zinc is riding the supply deficit wave. The company is among the best positioned in all of Asia to benefit from rising prices. First of all, this is not news to us at Pinnacle. More than one month ago we highlighted Hindustan in a Weekly Volume for our subscribers. Since, the company’s share price has risen from $250 per share to over $280.
Pinnacle Predicts Zinc and Hindustan in mid-June Report
Investors Miss Out While Majors Acquire covers the topic of new supply via zinc production coming online. Hindustan is one of the world’s top zinc producers. Consequently, we made it clear the company had a head start on the competition and would reap the profits of a zinc market in supply deficit. This morning’s news that net income increased 81% for Hindustan is proof that current producers of zinc are in the midst of a prime profit making opportunity.
India Times reported that,
“The revenue and cost of production led to a 113% increase in EBITDA during the quarter to Rs. 2,404 crore, the company said in a statement issued on Thursday.”
Below is an excerpt from Investors Miss Out While Majors Acquire, published on June 19th, 2017:
“Zinc is currently in a supply deficit; and, while it will not last forever, long-term base metal producers are on the hunt to secure future production.
“As can be seen above (blue represents supply/red line represents demand), hundreds of thousands of tons of zinc concentrate has come off-line in the past few years. Four zinc mines, being upgraded or brought into production, will shore up supply and move zinc towards a balanced market. However, with populations soaring and new demands for zinc, supply deficits are expected through 2020. That means we are in a period where acquisitions and buyouts occur, according to historical trends.”
As long as zinc remains in supply deficit, its price will stay strong. Look for senior producers of the metal to expand production and more attention to be shown to juniors in the space.
