After many months in the gutter, two of the world’s least-loved metals are enjoying an honest-to-goodness turnaround.
Zinc and nickel are both soaring this summer after recovering from shocking depths early in the year. Zinc touched US$1.00 a pound on Thursday for the first time since mid-2015, while nickel jumped to a nine-month high of US$4.73 a pound. Zinc is up 48 per cent from its January low, and nickel is up 38 per cent in the same period.
These moves were a long time coming. For the past two years, experts have been warning of major supply-side problems in these markets and predicting that rallies were inevitable. It took a while for them to materialize, in part because of high inventories. And now that they are finally here, there is debate about whether they are sustainable.
No one should think the current prices are great ones. At US$1.00, zinc is still only half the value it reached at its peak in 2007. Nickel, meanwhile, topped out at US$24 that same year. It is just a tiny fraction of that today.
“Nickel has moved up, but only from horrible, horrible, horrible levels to something still horrible but not triple horrible,” said Bart Melek, head of commodity strategy at TD Securities.
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