Zinc's turn to shine?

Här kommer mer Zinkgodis

 These factors suggest a new era for zinc is coming soon!



Zinc Market Highlights:



The rise in LME zinc inventories appears to have leveled off at 700,000 tonnes, awaiting global economic recovery. The only bright spot is zinc consumption is China, which continues to grow at 8 to 10% per annum.

Importantly, China has now switched from being a significant exporter of zinc, thereby depressing zinc prices (major negative factor in late 1990?s), to now being a net importer of zinc.

Zinc prices have increased sharply from a low of US$0.33/lb to current US$0.42/lb largely in response to devaluation of the US dollar and expectation of a decline in current high metal inventories.

Zinc concentrates remain in tight supply, particularly in the Pacific Region. The shortfall in concentrates has contributed to reduced metal production and decline of treatment terms. Reduced smelter profitability has resulted in permanent shutdown of 180,000 tonnes of capacity. Continued low treatment terms may lead to additional smelter closures. Smelter closures and supply constraints are expected to rebalance inventories in zinc metal during 2004.

Forecasts for 2003 and 2004 suggest a modest global economic recovery and resumption in growth of zinc consumption.

Little new mine production is planned for 2003 and 2004 to offset mine closures during the period. New mines in-waiting will require significantly higher zinc prices to secure development financing. These factors are contributing to a very large supply gap in 2005 and beyond.

Economic indicators in Europe, Japan and North America are beginning to show signs of recovery (Macquarie Research and others):



United States ~ US economy grew 3.1% in Q2 2003; US Retail Sales up 0.6% in August and US Industrial Production up 0.4% in September; and US Geological Survey Metals Indicators signaling strong metals recovery in 2004. Forecast 6-7% growth in GDP in Q3, 2003.



Japan ~ Japanese Purchasing Managers Index rising and Tankan Business Survey trending positive for first time since 2000. Forecasting stronger 2004 production in response to Chinese demand for exports.



Europe ~ Apparent halt in decline of Industrial Production indexes and mixed growth outlook.



China ~ Year-on-year September GDP growth of 16.3% forecast to continue at 8 to 10% per annum for 2004. Chinese exports rise 31% year-on-year September to US$41.9 billion, while imports of largely raw materials rise 40%. Dramatic growth in consumption of all metals as infrastructure expansion continues at explosive rate of 22 to 25 percent.



The recovery of North American and Eurozone economies, together with rapid growth in Asia, is producing strong growth in consumption at a time of generally low metals inventories. Recent metal prices increases appear to be factoring in this outlook.

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