Metal market research and consulting firm Beijing Antaike Information Development Co. recently released a report co-authored with Sweden based Raw Materials Group, projecting that zinc may climb as high as US $2,800/ton by 2014 on the back of Chinese-led demand. “The rapid development of China’s industrialization and urbanization will support zinc consumption in the next five years,” the report said, projecting that demand will outstrip supply by 100,000 tons by 2013 and 150,000 tons by 2014.

Currently, extensive surpluses remain piled in LME warehouses, but levels have been falling. Stocks ended August at 855,850 tons, down from 894,825 in July, their highest level in 16 years. However, deliverable Shanghai zinc stocks have been moving higher, up to 417,784 tons at the end of August from 400,571 tons in July, suggesting a current reluctance to exchange future contracts for delivery of zinc.

2011 on the whole has been a weak year for the zinc. In May of this year, BNP Paribas (EPA:BNP) said that zinc was the base metal most likely to underperform, as stockpiles had already increased by 250,000 metric tons up to that date. Since then, surpluses have come down some, but continued mine production are expected to keep supply strong until 2013 when a number of key sources will be come offline.