Overview: VanEck's natural resources investment strategy spans the breadth of raw materials commodities sectors, and the industrial and base metals sector plays a critical role. Global infrastructure and industry are dependent on supplies of copper, nickel, zinc, aluminum, lead, and tin, and on the companies who mine and refine them. As of August 31, 2016, industrial and base metals-related holdings accounted for approximately $2.5 billion of the firm's assets under management.
Zinc is Top Performer in 2016
2016 has been a notable year for zinc, with the metal's price soaring 41.3% year to date through August 31, 2016. The world's third most important base metal in terms of dollar trading volume (behind copper and nickel; see Chart A), zinc has been the top performer among base metals in 2016 - a position traditionally held by the red metal, copper. From our investment perspective, falling supply and resilient demand have made zinc one of the most attractive base metals in 2016.
Supply/Demand Fundamentals are Supportive
Most metals suffered during what was a protracted commodities downturn (2008-2015), the worst seen in 40 years. But we believe the turnaround began in this year's first quarter (read more on the commodities rebound), and zinc has been a major beneficiary. The fallout from the commodities recession resulted in significant shutdowns of mines and production. Zinc production has fallen, as evidenced by tightening treatment and refining charges, and weak supply growth. Inventories have also declined since early 2013, both at smelters and in warehouses, but demand remains resilient, supported by ongoing global infrastructure spending.
We believe that the current supply and demand fundamentals in zinc are very supportive of this year's higher prices, which, in our opinion, may have the potential to climb even higher. Several significant catalysts, described below, are likely to continue to strengthen as the year progresses and should
