Zinc Jumps as Drop in Inventories Signals Rising Demand
London, Jan. 21 (Bloomberg) -- Zinc jumped more than 3
percent, its biggest rise in 10 months, on signs that demand
from manufacturers is outpacing supply from mines, forcing
consumers to draw from exchange stockpiles.
Zinc inventories during the past year have steadily
declined, and stockpiles in today's daily report dropped by
425 tons to 319,450 tons, the London Metal Exchange said. LME
inventories are about one-third lower than a year ago and
earlier this month reached a 6 1/2-year low.
''The fundamental picture is still good for zinc,'' said
Tariq Salaria, a base metals analyst at Brandeis (Brokers) Ltd.
in London. ''As floor trading opened we saw a surge of buying.''
Zinc for delivery three months forward on the London Metal
Exchange rose as much as $30 a metric ton, or 3.2 percent, to
$979 a ton -- the biggest one-day gain since March 16 and the
highest price since Dec. 16.
Much of the buying came from speculators, traders said, who
had sold metal they didn't own expecting that prices would fall.
Today they bought back some of their positions, fueling the
rally, traders said.
Zinc's main use is as a protective coating for steel, which
is then used for roofing in the construction industry, as well
as in the auto industry.
--Andy Webb-Vidal in the London newsroom (44-171) 330 7743/tc
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