Future Zinc Price Projections
Zinc Miner Volcan Says Prices Will Stay Above $3,000 Until 2008
2006-05-25 09:22 (New York)
By Matthew Craze and Maria Leaniz
May 25 (Bloomberg) -- Volcan Cia. Minera SA, South
America's biggest zinc producer, said prices for the metal won't fall below $3,000 a metric ton until 2008 because of a
production shortfall.
Zinc will remain almost three times the average price for
the past five years because of a scarcity of the metal, Volcan
Chairman Roberto Letts said in an interview in Madrid today.
Letts said he wasn't ``convinced'' there is a ``bubble'' in zincprices.
``There is good demand, and there is no new production, so
for now prices will stay above $3,000,'' Letts said.
Zinc futures in London have risen 86 percent this year, and
traded at a record $4,000 on May 11. Demand is forecast to
exceed production, and investment funds are buying the metal as they diversify into commodities. Zinc is mostly used to
galvanize steel.
Volcan has raised its zinc and lead production by 3 percent
this year, and it will raise zinc output further in the second
half at the Cerro Pasco and Yauli mines, Letts said. The Lima-
based company has increased its silver output 10 percent so farthis year, he said.
Peru was the world's third-largest zinc-producing country
in 2005, behind China and Australia, according to the U.S.
Geological Survey.
Shares of Volcan closed yesterday in Lima at 2.47 soles,
giving it a market capitalization of 4.45 billion soles ($1.36
billion).
Zinc for delivery in three months on the LME rose $85, or
2.5 percent, to $3,550 a ton as of 1:15 p.m. local time.
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