Analysis of the Zinc Sector, Including a List of 20 Zinc Stocks

Zinc and copper are in a similar situation; low prices in recent years have deferred investments, limiting future supply growth, while demand has slowly increased. As a result, a significant supply gap is expected to emerge sometime in the next decade. However, as we approach the end of the economic cycle, a likely recession or global economic slowdown would have a significant impact on commodity markets and zinc miners.

In such a situation, the best investment strategy is to go through each potential investment, create earnings models, estimate the miner's strength and survival potential in a bad environment, and find good management.

Zinc's main application is corrosion-resistant zinc plating of iron (hot-dip galvanizing). Other uses include electrical batteries, small non-structural castings, and alloys like brass.

Zinc investment: supply, demand, and price

Zinc has a strong correlation with the global economy, particularly Chinese economic development. More growth means more construction, which means more demand for steel and zinc. Furthermore, if demand for zinc batteries increases, demand for zinc may increase even more. Finally, for investment purposes, it all comes down to:

• Mining expenses

• Size reserve

• Supply and demand

• Other dangers (jurisdiction)

• Debt Sentiment and Financing

• Integrity and quality in management

• Safety and value margins

Irrationality can be found in the preceding example, so let us investigate whether it exists in the zinc sector.

Zinc prices have tripled over the last two decades due to increased Chinese demand, as has the case for most commodities. A high level of volatility is also common. Zinc hit a high of $1.6 last year and a low of $0.61 a few years ago.

Past prices are meaningless; we need to see what the minimum prices are in relation to production costs and supply and demand. Prices are still high and relatively stable at the moment. Zinc mining stock prices, on the other hand, have plummeted.