Analysts predict another great year for zinc, which reached multi-year highs in 2017. In 2016, zinc was the best-performing LME metal, jumping more than 64% in 12 months. In 2017, zinc continued to climb, but at a slower pace: it’s gained over 21% since January. Zinc’s highest point of the year came in October ($3,369.50). Supply worries and a strong Chinese demand outlook supported the base metal’s rapid price rally. The lowest point of the year for zinc came in June ($2,435). A stronger US dollar and risk aversion due to geopolitical tensions turned investors away from the base metal. One of the key zinc trends this year has been the depletion of zinc stocks built up over the past 10 years; they have run out due to mine closures and cutbacks. According to CRU Group, that led to a deeper refined zinc metal deficit and to a drawdown in global stocks. For his part, Junior Stock Review founder Brian Leni said that while he was expecting higher zinc prices in 2017, that didn’t translate into gains for the junior zinc stocks as he had estimated. Supply and demand dynamics According to the International Lead and Zinc Study Group, global refined zinc metal production is forecast to fall by 1.4 percent this year, to 13.53 million tonnes. However, next year the group predicts an increase of 3.9 percent, to 14.06 million tonnes. That said, CRU Group analysts expect around 775,000 tonnes of new zinc mine supply to come onstream next year, with MMG’s Dugald River mine and Vedanta’s Gamsberg mine being notable contributors to production. Despite those additions, CRU Group analysts believe global zinc stocks will continue to be rapidly drawn down in the first half of 2018, although this depletion will slow down in the second half of the year. Similarly, CRU Group analysts expect Chinese zinc demand to grow next year, but at a slower rate. High prices will also begin to constrain demand growth next year in China and elsewhere. Outside of China, Li expects demand in the US and Europe to increase next year as industrial activities in both economies continue to gather pace. With all that in mind, analysts forecast that the refined zinc market will remain in deficit in 2018. CRU Group estimates that the deficit will moderate from this year’s 750,000 tonnes to around 200,000 tonnes. Key factors to watch As the new year starts, investors should keep an eye on several catalysts that could impact the zinc market. CRU Group analysts mentioned Glencore’s mine output and the price-related response of Chinese mine supply as major factors that could potentially impact the market. Similarly, investors are suggested that watch winter capacity cuts in China, which depend on pollution levels and how local governments carry out the winter cuts. Looking ahead, zinc prices are on track to climb even higher in 2018 than they were this year. Experts said, on an annual average, basis zinc prices could rise to $3,154 in 2018. Leni also remains very bullish on zinc, and expects the metal to continue to head toward $2 per pound, supported by falling global inventories, Chinese mine closures and stable steel market demand. For investors interested in zinc stocks, there are many zinc-focused companies to keep an eye on next year: e.g. Adventus Zinc, Solitario Zinc, Tinka Resources and Vendetta Mining. However, investors should know that in a rising zinc price environment, many junior companies will boast a focus or exposure to zinc. More than ever, it will be paramount to do your due diligence.