Zinc Supply has been on the decline for the past four years, despite being one of the most widely consumed metals in the world. Escalating tensions between the U.S and China is the latest tailwind that threatens to influence the price of the industrial metal as demand continues to outweigh supply.
Shine Minerals Watts Lake Zinc Project
Zinc inventories are currently languishing at 10-year lows, after decreasing 900% from 900,000 tons a year to 100,000 tons a year. Prices are yet to reflect the slide. Shine Minerals Corp (CVE: SMR) is seeking to take advantage of the enormous market opportunity as demand continues to outpace supply in the market.
The company is currently engaged in aggressive exploration and mining operations at the large and highly prospective Watts Lake project. The company acquired a 100% interest in the Watts Lake project, currently covering 13,248 hectares, north-east of the town of La Ronge Saskatchewan.
The exploration and mining company has already hit mineralization in seven holes as part of a maiden drill program at the Watts Lake Zinc Project. According to the company’s COO and chief geologist, Ross McElroy initial results from drilling operations at the Watts Lake are very encouraging.
The results support historic drill holes in the area that indicated Zinc mineralization at depth 50 million below the surface.
“Our initial sampling program on the property, conducted in the fall of 2018, was very successful at confirming and exceeding historic high-grade trench results of zinc, lead, and silver mineralization. Our drill program will focus on specific areas of the Main Zone where surface sampling from Trench 4 returned particularly high zinc assays as well as strong silver and lead assays,” said Mr. McElroy.
The positive drilling results come at a time when Zinc prices are showing signs of edging higher after coming under pressure in recent months. Prices are currently languishing near six months lows as a trade dispute between the U.S and China continues to drag on.
With the trade war, showing no signs of slowing down, China has warned companies operating in the U.S of potential harassment. The biggest point of concern now is that a brutal trade war between the two economic powerhouses could dampen economic growth.
Slow economic growth could have a catastrophic impact on industrial metals as demand could slow, a move that could result in a further slide in prices. Zinc is one of the biggest industrial metals whose demand could take a hit consequently affect prices, should economic growth slowdown come into play.
Data released by Shanghai Future Exchange indicate that Zinc stocks inventories rose 5.4% to 59,351 tons as of the end of May. However, inventory levels are still down by 54% from 2019 highs of 124,038 tons registered in March. In recent weeks, Zinc prices have shown signs of edging high amidst growing concerns over dwindling inventories.