Zinc

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Zinc prices could fall on higher production in West, but China remains key factor in market

Zinc prices could decline if forecasts from consultant group CRU International that western zinc mining production will soar in the next three years prove correct.
The expectation for mine supply growth of 30% during that period compares to 15% between 1997 and 2000, according to Octagon Capital analyst Hendrik Visagie.

However, he thinks the new mines included in the CRU forecast will likely not come onstream as soon as expected because of financing and infrastructure problems, fiscal disputes, and the strained supply of both labour and materials.
While acknowledging the importance of mine growth in the West, China is the key driver for the market, Mr. Visagie said in a note to clients.

From a net exporter of zinc concentrate in the 1997-2000 period to a large importer these days (450,000 tonnes in 2006), Mr. Visagie expects this trend will continue for China as its own production plateaus.

Given that China’s zinc concentrate imports rose 148% in the first three months of 2007, Mr. Visagie thinks zinc markets will remain tighter than many expect.

Jonathan Ratner
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Online source:
http://communities.canada.com/nationalpost/blogs/tradingdesk/archive/2007/05/23/zinc-prices-could-fa...