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

To: Ray Hughes who wrote (180)	4/29/1999 12:58:00 PM
From: Stephen O	Read Replies (2) \| Respond to of 3270

MB -- Zinc hits eight-month high, rally continues 4/28/99 17:2 April 28 (Metal Bulletin) - The LME zinc market has managed today to sustain the rally which started last week and traders believe that a shot at $1,120 per tonne from today's range at $1,080-1,090 per tonne is conceivable, perhaps by the end of the end of the week. Strong fund buying and equally good producer selling out of Asia has managed to cap the market so far but the trade says that the fund action is likely to absorb the selling over the next day or so. "The funds are going to see this one out. It might take us a little while to hit the target that the charts are pointing towards but I feel that the support is sufficient to carry the market above $1,100," a trader said. Volumes are good in what is some very brisk trade and the consensus is that sentiment is still very favourable towards the market. Figures from the International Lead & Zinc Study Group released last week forecast that world demand for refined zinc metal will rise by 2.2% this year to 8.05m tonnes and in the West by 1.8% to 6.61m tonnes. However, in Japan revised forecasts show that a further fall is now expected in 1999. This decline was underlined on the April 1 when the commodities sector had opportunities to buy material at a duty free rate under the General System of Preferences. Zinc sales under this scheme fell from 60,000 tonnes in 1998 to 19,000 tonnes in 1999. This should be balanced by a partial recovery in Korea, further growth in China and an end to the decline in other parts of Asia. Further growth of 2.5% is forecast in the USA and 1.7% in Europe, fuelled principally by gains in the galvanising and brass sectors. On the supply side, zinc mine output is expected to increase in 1999, with rises of 6.1% to 7.75m tonnes globally and 6.8% to 5.99m tonnes in the West, with the largest gains to come from the expansion of the Red Dog mine in 1998. Australia's Century mine is also to open in the second half of this year. Increased production in Ireland, Sweden and Spain will lead to a 9% rise in Europe. Output of refined zinc metal is expected to rise by 2.1% to 8.2m tonnes worldwide and by 3.3% to 5.94m tonnes in the West. Much of the increase will be in Asia - especially in Korea, Japan,Thailand, Iran and Kazakhstan. Output in Australia is expected to rise by 10.9%, boosted by the completion of Korea Zinc's 170,000 tpy Townsville smelter later in the year. Even though the exact level of net exports to the West from China in 1999 will be linked to international prices, present indicators suggest a similar level to 1998. Shipments from the CIS, however, are expected to rise. ILZSG anticipates that there will be a close balance between overall refined zinc demand and supply in 1999. Paul White of ILZSG said that the outlook for Asia is positive. "It looks like the decline in Asia - despite the reduction in Japanese demand - will be arrested in 1999, thanks to recovery in demand in Korea especially and throughout Asia overall," he said.