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Gold/Mining/Energy : Breakwater Resources (T.BWR) -- Ignore unavailable to you. Want to Upgrade?

To: Wayne Finucan who wrote (633)	6/21/1999 2:24:00 PM
From: Stephen O	Read Replies (1) \| Respond to of 962

MB - Zinc firm as market awaits labour news 6/18/99 17:3 June 18 (Metal Bulletin) - The zinc market remains firm in the USA as the market waits further news regarding the labour negotiations at Falconbridge's Kidd Creek metallurgical plant and at Cominco's Trail smelter. Premiums remain around the 4.5 cents per lb mark, but traders warned that if either Trail or Kidd Creek is hit by a strike, premiums could shoot up to above five cents "with just a few phone calls". Traders said that the market has not yet factored in possible strikes to the price of zinc, as there is some optimism that deals will be struck in both cases. In the case of Kidd Creek, at least, the market is unlikely to have long to wait as the United Steel workers union has imposed a July 8 strike deadline if a contract can not be agreed. A Falconbridge spokeswoman told MB that management met with the union for three days of talks last week and more negotiations are slated for June 23. Progress is being made, a the spokeswoman said, but the going remains slow. "Right now Kidd Creek could go either way. We should know better in a week or two," a source familiar with the situation said. "The market is watching both Kidd Creek and Trail very carefully, but has not factored the possibility of a strike into the premium yet. If there is a stoppage, the premiums could shoot up," one US-based trader said. Market sentiment was given a further boost last week by figures from the US Commerce Department which showed a 6.3% increase in May housing starts. This followed a 9.7% drop in April starts. Growth in the building sector normally boosts demand for zinc. Meanwhile, the US Defense Logistics Agency awarded 3.16m lb of zinc in its latest solicitation. Rudolf Wolff took the largest quantity with 960,000 lb at 44.91 cents per lb and 440,000 lb at 44.67 cents per lb. US Zinc took 1.056m lb at 45 cents per lb, Colken Pty Ltd won 352,000 lb at 45.8 cents per lb and Trademet also took 352,000 lb at 44.76 cents per lb. The unsuccessful bidders were Ansam Metals Corp which bid for 80,000 lb at 43.63 cents per lb and Allied Deals which bid for a total of over 1.4m lb at prices ranging from 43.86 cents per lb to 44.06 cents per lb. The next bid opening for zinc is due on July 20. In the concentrates market, after all the huffing and puffing, the zinc treatment charges season ended in a peculiar manner although it does appear that nobody's house was blown down. Even if it was, it would have been difficult to make out through a smokescreen of weighted averages, variable QPs, silver content charges and assorted nuances which were selectively and exhaustively arranged between miners and smelters over a period of nine months. The last battle in what was a very protracted war concerned Cominco and Metaleurop. Both agreed that neither would divulge the details of what was negotiated between them other than it was "similar to the deals which had gone before". The difficulty in ascertaining what the deal actually hinges on the different qualities of concentrates produced at Cominco's Red Dog and Polaris mines. Polaris material is of a higher quality than that of Red Dog. It is understood that the deal involved taking different quantities of each material and treating it as a weighted average which was then split up for invoicing purposes due to the quality differential. "In the big scheme of things it's a TC of about $169 but its hard enough to put a definite number on these things at the best of times without taking two different grades from the same company into account," a concentrates trader said. Market sources say that in the end the miners did well to achieve the result they did. "When you have an annual or long term contract it is supposed to be based on what everybody anticipates what is going to happen for the rest of the year. What happened this year was the market was getting longer and longer. The longer the smelters waited the stronger their position became. Because it was delayed so long again people like Cominco should actually have done worse. Not because they deserved to do worse but because it was so prolonged the market was turning against them with each day that passed. I think the smelters will be kicking themselves that they did not get a couple of dollars more and they are going to look for blood next year. If there is even a hint that the market is oversupplied, and it looks as if it might be, the more likely scenario that it could even be worse," a trader remarked. 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 -0- (BN ) Jun/18/1999 17:03