ZINC The base metal. News and Views. Symbol Zn Message Board

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Gold/Mining/Energy : ZINC The base metal. News and Views. Symbol Zn

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To: Stephen O who wrote (154)	3/22/1999 1:57:00 PM
From: Ray Hughes	Read Replies (3) of 3270

Stephen O: Many metals consumers employ consulting commodities price forecasters who try to time short term buy/sell advice on the basis of charting. LME zinc chart exhibits regular trading cycle since about November 1997. With zinc's relative strength, momentum and stochastic topping out a week ago, its not surprising that consumers are holding off buying. The important question is whether fundamentals of full utilization of smelter capacity will cause users to buy, as short cycle completes bottom, with sufficient force to give chart evidence of a bullish trend reversal. A strongly bullish trend reversal would occur if zinc - basis LME 3-month buyer ( http//:www.lme.co.uk/cgi-bin/php/Prices/choice.html ) chart shows bottom at about US$1000 or US$0.454. Weaker reversal occurs if LME bottoms just above $950 or US$0.431. Chart already suggests 3-month price has broken out of down-trending channel. Lack of sufficient zinc smelter capacity to accommodate Asian economic rebound suggests trend reversal has already occurred. It could be argued that zinc price is now just consolidating gains made in breaking out above down-trend channel, and that corrective move to about US$975 or $0.443 will preceed next up-move to test the US$1055 or $0.479 resistance. Two things suggest the zinc price will not move in a dramatic fashion until autumn: 1) with Asia slow, American/European seasonality should predominate (soft from May through August) and, 2) there is adequate inventory measured as about 5.2 weeks of consumption at present. Hence, zinc could move sideways while Asian demand slowly begins to trend up and net American/European demand continues to rise modestly. Then, as the seasonal demand strength emerges, consumers might get a little jittery about being caught with low inventory. A demand surge, augmented by re-stocking, in the 1999 winter could propel zinc through resistance at US$1155 or $0.524. Next resistance level is at about US$1460 or $0.662 per pound. RH

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