Zinc Rises to 5-Month High on Signs U.S. Economy Remains Robust
London, Feb. 4 (Bloomberg) -- Zinc posted its biggest rise
in 1 1/2 years and reached its highest price in five months
after reports showed that manufacturing industries remain robust
in the U.S., the world's top consumer of zinc.
Factory orders rose 2.3 percent in the U.S. in December,
the Commerce Department said, a sign that the outlook for zinc
consumers such as the auto makers and construction companies
could be improving. The National Association of Purchasing
Management's production index also advanced.
''Zinc is up as people are looking at the macroeconomic
picture,'' said Doug Upton, head of commodities research at HSBC
Investment Bank Plc in London. ''Factory orders are good, in
line with the NAPM, and people are going to have to revise their
forecasts.''
Zinc for delivery three months forward on the London Metal
Exchange rose $34, or 3.4 percent, to $1,025 a metric ton, its
highest price since Sept. 15 and biggest one-day rise since July
25, 1997.
The NAPM production index rose to 53.1 last month, from
46.8 in December, meaning more manufacturers reported increased
production than those reporting a decrease.
Before today's rally, zinc was close to its lowest price
since August 1994, after falling about 15 percent during last
year because of falling demand in parts of Asia. After the U.S.,
Japan, China and South Korea are the next biggest consumers of
zinc.
Still, analysts said zinc's rise could stall in the days
ahead amid selling from Chinese producers, who have exported
little metal in recent months because of weak prices. The lack
of Chinese sales contributed to a drop in zinc stockpiles on the
LME, which reached their lowest level since 1992.
--Andy Webb-Vidal in the London newsroom (44-171) 330 7743/tc
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