Investing in Zinc through Future Markets - dummies

Investing in Zinc through Future Markets

Zinc is the fourth-most widely used metal, right behind iron/steel, aluminum, and copper. The best way to invest in zinc is by going through the futures markets.

The London Metal Exchange (LME) offers a futures contract for zinc, which has been trading since the early 1900s and is the industry benchmark for zinc pricing. The contract trades in lots of 25 Tons and is available for trading during the current month and the subsequent 27 months.

Zinc, which has unique abilities to resist corrosion and oxidation, is used for metal galvanization, the process of applying a metal coating to another metal to prevent rust and corrosion. As you can see from the following table, galvanizing metals (particularly steel) is by far the largest application of zinc.

Zinc Consumption by Sector
Sector Percentage of market consumption
Galvanization 47%
Brass and bronze coatings 19%
Zinc alloying 15%
Other 14%

Source: London Metal Exchange