What is Zinc?
In order, Zinc is the fourth most common metal produced behind iron, aluminium, and copper with an approximate annual production of 13 million tonnes. In appearance Zinc has a bluish-white colour but the common commercial grades of the metal have a dull finish.
The total amount of zinc resources is estimated at 1.9 billion tonnes. China is the largest producer of Zinc followed by Australia.
Uses of Zinc
Zinc oxide is commonly used within the industrial sector. It’s used as a white pigment in paints and has an important role in the manufacture of rubber. It is also used as a heat disperser for the rubber and acts to protect its polymers from ultraviolet radiation. Zinc chloride can be added to lumber as a fire retardant.
Risks of Zinc
Like any trading futures contract, there is always the possibility that the underlying asset i.e. zinc, will move in the opposite direction to which you anticipate. For example, you take a long position expecting the price of lead to rise and instead, it falls.
With any commodity, supply and demand will affect the price. This risk should be monitored on a regular basis and adjusted to suit your risk parameters.
Mining of metals has an inherent risk with the level of costs associated with extracting the product from the earth. This can include, but not limited to: the cost of oil to fuel machinery, cost of labour or new tax regulations being implemented.