Reuters reported that analysts are seeing some investors trade in long zinc positions for lead due to the belief that though zinc supply is falling, there is a more immediate scarcity of lead.
As quoted in the market news:
‘We think the zinc story is reasonably strong but we don’t think it’s a 2014 story,’ Hermes Fund Managers’ metals analyst Joseph Murphy said.
Spread and ratio trades between the two metals, often found in the same mines, is a top play among investors and traders.
They piled into zinc last year, betting on shortages from big operations such as Australia’s Century mine, the world’s No. 3. The mine, owned by China’s MMG Ltd, is due to see output drop this year and run out of ore in mid-2015.
‘Fundamentally zinc is improving, but over a longer time frame. Lead has more solid fundamentals now,’ Standard Bank analyst Leon Westgate said. ‘Lead should outperform zinc by some margin (in the coming weeks).’