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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (721)	8/21/2001 6:50:20 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Global downswing, excess output may see zinc prices slide financialexpress.com Zinc prices in the local markets are seen to be soft during the months ahead following the fears of declining prices on the London Metal Exchange (LME), traders said. Global slowdown, over supply and the ongoing recession in Japan are said to be the three main factors responsible for this current sluggish situation in the zinc industry. This scenario, traders add, would see a cut in zinc production in the international market. While in the domestic market, the two domestic players — state owned Hindustan Zinc has a capacity of 1,52,000 tpa while Binani Zinc 30,000 tpa — too may follow suit, traders say. Of the total estimated zinc demand of 2.83 lk mt tn, India imports around 25 per cent and therefore, the shadow of price trends on the LME impacts the local prices. Currently, zinc prices in international markets are quoted at around $819 a tonne, which traders say, have slumped to its lowest in the last one decade, which commodity analysts say is a victim of over production world-wide. ............................................................................................................................... In the global market, zinc prices have started to come down in the last year and these continue to be lower than last year’s levels by around 35 per cent. In August 2000, zinc prices were quoted at around $1,150 a tonne. Said a local zinc trader/importer: “China is seen as a unstable factor for the zinc market”. He added that China, which has been quiet in zinc exports recently due to decline in world zinc prices, could resume zinc exports further due to lower demand at home. This could result in zinc prices on the LME to fall further. Another reason of the zinc prices fall, is that zinc stocks are likely to continue increasing, as there is significant back-up stock of material near the LME warehouses, said one of leading metal analysts. Officials working in the production sector, predicted the market would remain over-supplied for the next few years, in the international market. Thus, industry will not see a rising demand for zinc sufficiently to wipe out any surplus due to a downside of zinc use. “Domestic industry and international players have to wait long to see a significant recovery in zinc price from the current levels, provided there is a strong global recovery.” analyst said. Things have changed drastically in domestic and the global scenario is also not very encouraging for zinc. Hence, not much rise is expected in the growth of demand for zinc in the country is estimated at 6 per cent by the Government, but leading producers said it has averaged around 2.5 per cent pa for the last some years. Analysts say world zinc production cuts are inevitable unless demand and prices rise rapidly. An industry player said “Not in the current situation, but if zinc prices fall to around $750 mt industry starts to see some major production cuts internationlly and this should be on the domestic front too”. During last four years, due to increased Chinese smelting capacity, rising production in Europe and Australia and reduced demand by the steel galvanizing industry has added a poor tone to the zinc demand on both fronts - domestically and globally. The zinc industry has experienced significant expansion in recent years, with new projects increasing total world capacity for both mine and zinc metal production. Pasminco’s giant Century mine in Australia and Ivernia West Inc’s Lisheen deposit in Ireland were seen as the main contributors to rising output this year while Peru’s Antamina project was expected to take up the reins in 2002.