(MB) -- Zinc finds support
7/10/98 17:6
July 10 (Metal Bulletin) -- Zinc continued its latest revival
this week to trade at around $1,047 per tonne basis three
months on July 10. The market moved up steadily during the week
and never dropped below $1,020.
Market observers were relatively encouraged given that the
other base metals slumped to fresh lows during the week.
Analysts said there was some short-covering and book squaring
at the end of the week and that this, together some good
technical buying helped boost the market.
One analyst said that if this recent spell of strength is
followed through the market could soon break $1,060, but he
remained sceptical about the chances, and noted that a similar
rise at the end of last week was sold off the following Monday.
A recent report has hinted at a possibility of a further
recovery later this year. Prices should finish the year above
$1,200 per tonne according to the latest report from Metal
Bulletin Research (MBR).
Negative sentiment is the major reason for the weakness of the
zinc price, according to the study. MBR said that the
underlying fundamentals of the zinc market are sound and
although zinc prices are hovering just above $1,000 per tonne,
many of the other market indicators are positive.
These indicators include the accelerating decline in LME
inventories while stocks are even falling at the Singapore
warehouse. Another indication of tightening conditions has been
the steady and widespread rise in premiums since the start of
this year. Supply has been affected by various closures,
strikes and technical problems while exports of refined zinc
from China have dropped by some 30% in the first four months to
108,800 tonnes, although MBR noted that there is potential for
stock accumulation in China given the continued expansion to
refined output.
According to MBR's analysis, demand conditions remain buoyant
in North America and Europe. Apart from the positive economic
climate, the combination of the commissioning of new
galvanizing capacity, together with galvanized steel continuing
to boost market share in the construction and automobile
industries, is boosting demand for zinc. Smaller end-uses such
as brass and diecastings are also exhibiting positive growth in
these regions.
In addition, although zinc demand has adversely affected by the
economic problems in Asia, it is receiving some support from
the commissioning of new galvanising lines such as SeAH Corp's
100,000 tpy line in South Korea and from higher galvanized
output reflecting increased utilisation at recently opened
facilities. It is only in the more established galvanized steel
industry in Japan that production has actually fallen, strong
gains are still being seen in Taiwan and South Korea, MBR said.
MBR concluded that the strong economic performance in the key
consuming regions of Western Europe and North America, together
with the spate of galvanizing lines coming on stream, should
enable zinc supply to outstrip demand.
Metal Bulletin newsroom, London Tel +44 171 827 9977 Fax +44
171 928 6892 New York Tel +1 212 213 6202 Fax +1 212 213
6273
I think the last line has typo and should read "enable zinc demand to outstrip supply". This makes sense with gist of article. |
