ZINC-Major market developments in November
Reuters
Reuters - Saturday, December 11
asia.news.yahoo.com
LONDON, Dec 10 - Global zinc supplies will continue to outpace demand growth into 2011 and prices will fall to reflect this at some point, analysts say.
"Every producer is producing as much as they can and demand is sluggish, even in China," said Graham Deller of industry consultants CRU Group.
"The big surplus has got to weigh down on prices at some point," he added.
Independent consultant Angus MacMillan also said the market's fundamental outlook remained poor. He expected prices to fall to $2,000 a tonne before the end of the year.
The London Metal Exchange three-months zinc price <CMZN3> was last indicated at $2,291 a tonne.
"In a few years there's the prospect that the zinc market will get tight, but the general view now is it is going to be over-supplied for the time being," said Daniel Smith, an analyst at Standard Chartered.
Below are some of the more significant recent developments in production, stocks and prices that may continue to influence the direction of the market in the remainder of 2010 and into 2011.
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PRODUCTION:
Nov 17 - The global zinc market was in surplus by 175,000 tonnes in the first nine months of the year, the latest monthly bulletin from Lisbon-based International Lead and Zinc Study Group showed. Global refined zinc use amounted to 9.285 million tonnes, compared with 7.929 million in January-September 2009. World refined zinc output rose to 9.460 million tonnes from 8.200 million a year earlier. [ID:nLDE6AG11Q]
Nov 14 - China's production of refined zinc will rise by nearly 4 percent in 2011 from this year and consumption will climb 7.8 percent, an analyst at state-backed research firm Antaike said. He forecast China's refined zinc production at over 5.2 million tonnes next year, from just over 5 million tonnes expected this year. About 350,000 tonnes per year of new capacity is expected to start up in the fourth quarter of this year. [ID:nTOE6AD00V]
Nov 11 - China's base metal output is seen rebounding in November after falling, with the exception of primary aluminium, in October as power supply is set to ramp up after cuts in key production zones. [ID:nTOE6AA03V]
Nov 11 - China produced 4,311,000 tonnes of refined zinc in the first ten months of the year, up 23.2 percent from year-ago levels, according to the National Bureau of Statistics. Output of mined zinc rose by 26.2 percent over the same period to reach 3,092,000 tonnes. [ID:nAPI000623]
Nov 8 - Horsehead Holding Corp <ZINC.O> said its Monaca, Pennsylvania zinc refining facility will return to full production capacity ahead of schedule. The plant will be restarted at the end of the year rather than the first quarter of 2011, as previously expected. Production at the plant was curtailed following an explosion in late July, which forced the company to declare force majeure on some zinc oxide and special high-grade zinc contracts. [ID:nN08411224]
Nov 1 - Canada's HudBay Minerals Inc <HBM.TO> said it expects its full-year zinc production to remain in line with previous forecasts. In February, the company said it expected to produce 75,000 to 90,000 tonnes of the metal this year. [ID:nN01174721]
PRICES
Zinc prices ended November at $2,112 a tonne, down from $2,423 a month earlier.
Early strength, under the influence of LME benchmark copper, took three-months zinc to $2,599 a tonne, but prices were then hit by worries that China may hike interest rates and talk Beijing was looking to curb speculation.
By Nov. 17 zinc prices had fallen to $2,019.50, their lowest since late August, on fears that China would raise interest rates.
While the market picked up from those lows, the recovery was more muted than in some other industrial metals, with market watchers perhaps more mindful of high and rising supplies.
Even so, the fact that copper reached new record highs helped zinc prices to firm somewhat.
In July, the twice-yearly Reuters base metals price poll [MET/POLL] put the median average for the LME cash zinc price <MZN0> at $2,050 a tonne, down from the January forecast of $2,293.
STOCKS
LME zinc stocks in November maintained the general uptrend which has been in place since late 2007. They finished the month at 631,425 tonnes from 621,900 tonnes at the end of October.
On Nov. 17 inventories reached 634,800 tonnes, their highest since the beginning of 2005.
Stocks have since edged lower, but there appears to be little sign of an impending sustained downtrend.
At the end of last month LME stocks equated to almost 21 days of demand.
Inventories of the metal held in Shanghai warehouses were at 295,575 tonnes, up from 290,181 tonnes the previous month. Earlier in November they registered a new life-of-contract high of 303,429 tonnes.
Western world commercial stocks totalled 1,032,300 tonnes or 8.1 weeks of demand at the end of September, compared with 1,035,600 tonnes or 7.8 weeks the previous month and 925,000 tonnes and 8.0 weeks at the end of 2009.
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