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Gold/Mining/Energy : ZINC The base metal. News and Views. Symbol Zn -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (478)	6/25/2003 9:54:39 AM
From: Stephen O	Read Replies (1) \| Respond to of 3270

- The International Lead-Zinc Study Group (ILZSG) has released their June 2003 bulletin, reporting provisional data for the first four months of 2003. On a global basis, there was a 26Kt surplus in the zinc market for the period, down from a 75Kt surplus in the same period in 2002. While global zinc consumption rose 2.8% YoY in the period, the zinc market continues to suffer heavily from the combination of weak WW industrial demand, high levels of Chinese exports relative to current rates of demand growth and a lack of substantial production cutbacks. We see no material improvement in zinc prices before 2005, and as such, zinc remains our least preferred base metal exposure. - Consumption: World refined zinc consumption grew by 86Kt (2.8%) to 3.161Mt in the January-April 2003 period compared with the same period in 2002. Growth was strong in Asia, particularly China (+7.8%) and Taiwan (+26.6%). Notably consumption grew strong in Germany, up 18.9% YoY over the period. On a WW basis we note that consumption only rose by 1.7%, highlighting the strength of Chinese demand. - Production: World refined zinc production totaled 3.187Mt in the same period in 2003, up 37Kt (1.2%) YoY. This rise in refined production was attributable to a 75Kt (5.7%) rise in Asian production, which offset a 51Kt fall (-5.2%) in European production. Chinese production increased by 37Kt or 5.9% while Indian production rose by 23Kt or 30.3%. World mine production equaled 2.179Mt in the period, up 35Kt or 1.6% from the same period in 2002. On a WW basis, refined production actually fell 0.1% to 2.216Mt. - Inventories: The ILZSG reported that total commercial zinc inventories rose to 1.131Mt at the end of April 2003, up 53Kt from April 2002. While reported producer stocks have fallen by 58Kt YoY, LME warehouse stocks have risen by over 120Kt during that time. Currently zinc on-warrant stocks in LME warehouses now exceed LME copper stocks for the first time since July 1998, highlighting the comparatively weak position of the zinc market at present.