Consumers neglect physical zinc, eye lower prices
LONDON, March 19 (Reuters) - European physical zinc prices drifted
sideways this week amid thin volume trade as consumers ate into their
stocks, buying hand-to-mouth in anticipation of lower prices, dealers
said.
And in the longer-term, prices were expected to come under pressure from
the imminent reopening of two
mines owned by Canadian-Swedish conglomerate Boliden (Toronto:BOL.TO -
news), dealers said.
''There is just no interest from consumers,'' said one dealer. ''Most
people booked long-term contracts in
November and December and are carrying on with what they booked,'' said
one trader.
''(Another) pressure on the market is that producers wish to get rid of
any stocks that they might have, not
wanting to build inventory,'' said another. ''They are just sitting and
waiting for lower zinc prices,'' he added.
LME three-month zinc was quoted at around $1,027/$1,030 a tonne in
Friday inter-office dealings, having
drifted steadily lower since peaking at around $1,071 a tonne at the
beginning of the month.
Dealers quoted Special High Grade (SHG) metal in warehouse Rotterdam at
a $50/$60 premium to LME
cash, while CIS metal -- also in Rotterdam -- was trading at $5.0
disount to a $5.0 premium.
And while LME zinc stocks have fallen to mid-1992 levels, at around
305,000 tonnes there were as yet no
fears of any supply tightness, dealers said.
Boliden forecasts its Myra Falls zinc mine in British Colombia will
start operations on March 24, and build
up to full capacity in the third quarter of this year. Analysts estimate
full capacity for the mine at 60-70,000
tonnes of contained zinc per year.
And its 125,000 tonne per year Los Frailes deposit in Spain is expected
to be given the go-ahead to
reopen next week -- having closed after a toxic spill last April. It
will take several weeks from start-up,
however, before any new material lands on the market.
Italian energy group ENI's Porto Vesme zinc smelter was also due to
re-open soon after a three-month
maintenance shut-down.
I don't know the origin of the above report, but I like the thought that consumers are living from hand to mouth, that augurs for higher prices IMO. Stephen O |
