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

To: Mr. Aloha who wrote (969)	1/27/2006 11:39:37 AM
From: Stephen O	Respond to of 3270

Commodity Strategists: Zinc Price to Rise in 2006, Antaike Says 2006-01-27 01:05 (New York) By Xiao Yu Jan. 27 (Bloomberg) -- Zinc prices may rise 35 percent this year as demand outstrips production in China, the biggest user and producer of the metal, said Beijing Antaike Information Development Co., which advises the Chinese government. Zinc for immediate delivery may average $1,860 a metric ton, up from a previous forecast of $1,406, Feng Juncong, an analyst at Antaike, said in a phone interview from Beijing Jan. 26. Zinc averaged $1,379.8 a ton in 2005. Prices of zinc, used to coat steel to prevent corrosion, have risen to records on expectations China's expanding economy will require more metals, while smelter output in China has been disrupted by a toxic spill. The amount of money in funds tracking commodity indexes may rise 38 percent to $110 billion this year, Barclays Capital said this month. ``Production has been stymied simply because there is not enough raw material,'' said Feng, who has been tracking the industry for 12 years and correctly forecast China would become a net importer of refined zinc in 2004. Rising zinc prices have benefited producers. Shares of Teck Cominco Ltd., the world's biggest zinc miner, have gained 92 percent in the past year. Zinc for delivery in three months closed at $2,265 a metric ton on the London Metal Exchange yesterday, up 19 percent since the start of this year. Antaike's forecast for this year is higher than the $1,666 median estimate of 24 analysts surveyed by Bloomberg this month. The estimate is lower than a forecast by Deutsche Bank AG's chief metals economist Peter Richardson, who expects zinc to average $2,205. Consumption Chinese consumption of zinc and zinc alloys is expected to rise 7.3 percent to 3.25 million tons in 2006, while production may rise 3.6 percent to 2.85 million tons, Feng said. Forty-four percent of the metal is used to make galvanized products such as steel and 15 percent in batteries in China. The country's zinc production capacity exceeded 4 million tons in 2005, according to Feng. ``Chinese producers spent twice the amount of money in building up smelting capacity than they spent on mining to dig out zinc concentrate last year,'' Feng said. China imported 35 percent more of the refined metal last year to meet demand, fueled by an economy that grew by 9.9 percent and surpassed the U.K to be the world's fourth largest. Huludao Zinc Industry Co., China's biggest publicly traded zinc producer, and rivals turn zinc concentrate into refined metal. Processing fees dropped to below zero due to the scarcity of zinc concentrates, Feng said. Output Chinese zinc output fell 19 percent in December after Shenzhen Zhongjin Lingnan Nonfemet Co., the country's third- biggest zinc producer, shut its Shaoguan Smelter after the discharge of cadmium exceeded safety levels in a nearby river. The nation's zinc production last year fell 0.6 percent to 2.7 million tons, according to the Beijing-based Mainland Marketing Research Co., which releases monthly figures for China's National Bureau of Statistics. There may be a deficit of 180,000 tons of zinc in 2006, and inventories may fall to just 2.9 weeks worth of consumption, Deutsche Bank said in January. The stock-to-consumption level was 3.9 weeks in 2005. Zinc inventories monitored by the London Metal Exchange haven fallen 39 percent in the past year, and were 376,550 tons as of Jan. 26. --Editor: Poole