Supply issues expected for zinc, lead and copper
network.nationalpost.com
Posted: October 20, 2008, 11:02 AM by Jonathan Ratner
With zinc prices falling to US$0.504 per pound on the London Metals Exchange Friday, current prices suggest at least 1.3 million tonnes of production will shut down by 2009, according to Octagon Capital. If that happens, the lead market will also see a huge deficit, analyst Hendrik Visagie said in a research note. Lead, which gets roughly 80% of its mine production as a by-product of zinc, also dipped to $0.601 per pound.
While he thinks this would pose near-term supply issues for both commodities, the price of nickel should also encourage mine closures. But in this case, supply may have adequate time to adjust given the ongoing development of large projects, Mr. Visagie said.
As for copper, its depressed price is expected to keep new mines from being financed, so look for long-term shortages there.
“As a result, we are confident the current price of lead is overdone, and metal prices in any future scenario would be significantly higher than they are today,” the analyst said. |
