Zinc in 400,000-mt deficit in 06, lead balanced -CHR Metals
15 September 2006
The zinc market will be in a 400,000-metric-ton deficit for 2006, similar to last year, while its sister metal lead had moved to balanced following delays and disruptions at key operations, CHR Metals said Thursday.
But while zinc would remain "very tight" during 2007, lead prices on the London Metal Exchange were likely to fall next year, analyst Huw Roberts said at the GFMS base metals seminar.
"LME (zinc) inventory is likely to be drawn down before any increase in concentrate supply will filter through given strong demand growth," Roberts said.
He detected few signs of a negative impact of high prices on long-term consumption but left a question mark of fundamentals justifying current high price levels given the impact of fund and speculative activity in the market.
LME zinc traded at $3,275/ton Thursday, unchanged on the day, while lead stood at $1,306/ton, up $1.
Ramp up of zinc output was set to move the market into oversupply by the end of 2007, assuming sufficient smelting capacity to treat concentrates, Roberts said.
Rebuilding of working inventories that might include downstream products such as galvanized sheets would result in inventory growth in excess of market requirements by the end of 2008.
Zinc is primarily used as an anti-corrosive coating in for steel.
Source: Dow Jones
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