LME zinc inventories caused market optimism to grow, and attracted speculative capital to inflow to the market.
Zinc seen supported as stockpiles at the lowest level in more than three years fueled concern demand
Inventories of zinc monitored by the London Metal Exchange fell 29 percent this year and had a 14th straight weekly drop this week, according to data.
Global zinc demand will exceed supply by 290,000 tons in 2014 and by 300,000 tons in 2015.
A number of mine closures and forecasts of increased demand from the US and China for automobiles have pushed zinc further into supply deficit.
LME zinc inventories caused market optimism to grow, and attracted speculative capital to inflow to the market.
Forecasts for zinc prices have been driven higher this year by a paucity of big mine projects just as existing mines such as Century in Australia dry up.
Outlook: Zinc prices gained as the closure of some large mines supported the prices, also demand is expected to outpace supply, and will grow by 4.5% y-o-y to 13.58m tonnes in 2014. Demand for zinc increased in China, by 8% in 2013 y-o-y, and is expected to be higher by another 6% in 2014. With demand expected to exceed supply by 0.12m tonnes in 2014, zinc prices are likely to be shaped by how quickly the new capacity additions come online to replace the lost supply. The market will also continue to be closely tied to the construction and automobile industries, with the continuing growth expected in these sectors likely to support zinc prices in coming months. Now Zinc is getting support at 139.20 and below same could see a test of 135.40 level, and resistance is now likely to be seen at 145.40, a move above could see prices testing 148.20.