TGB EZM BWLRF Zinc -"Asset Class Shift"?
I keep thinking zinc and copper are due for major correction. Parabolic? But $110 billion infusion from pension funds in the coming year? TGB, BWLRF, EZM may run some more.
Commodities: Zinc price likely to extend gains on global shortage
Simon Casey Bloomberg News
MONDAY, JANUARY 30, 2006
LONDON Zinc prices have risen so fast that Robin Bhar, a metals industry analyst for 22 years, is about to raise his forecast for the second time in two months.
"We've all been left behind," said Bhar, who works in London with UBS. "It's just phenomenal. No one in their wildest imagination thought it would get to these levels."
Zinc has almost doubled since July 15 to $2,250 a metric ton on the London Metal Exchange, where it traded at record levels for 11 straight days this month. Prices may stay high as China increases imports and mining companies struggle to expand production.
"There is a global shortage," said Greig Gailey, chief executive of Zinifex, a zinc supplier based in Melbourne. "New mine development is a lengthy process, and it's difficult to see new mines coming on stream in the short to medium term."
Zinifex has no new mines planned until 2008 at the earliest.
Driving the market is China, where a booming economy is stoking demand for the metal, which is used as a rust-resistant coating for steel in buildings, cars and appliances. Rising prices have increased profit for companies like the Swiss company Xstrata and the Canadian company Teck Cominco, the world's biggest zinc miner.
The jump has raised raw material costs for steel makers like Arcelor and Mittal Steel.
Pension funds and speculators are joining the rally in zinc and metals including copper, aluminum and gold, seeking an alternative to stocks and bonds.
Money held by funds tracking commodity-linked indexes will rise 38 percent this year to $110 billion, according to Barclays Capital. Hermes Pensions Management, which oversees Britain's largest pension fund, said two weeks ago that it would invest £1 billion, or about $1.8 billion, of BT Group's retirement plan in commodities including metals.
"Two, three, four, five years ago, we would have seen that with the hedge funds, but not the big state pension funds," Bob Diamond, chief executive of Barclays Capital, said last week. "We are seeing an asset class shift."
LONDON Zinc prices have risen so fast that Robin Bhar, a metals industry analyst for 22 years, is about to raise his forecast for the second time in two months.
"We've all been left behind," said Bhar, who works in London with UBS. "It's just phenomenal. No one in their wildest imagination thought it would get to these levels."
Zinc has almost doubled since July 15 to $2,250 a metric ton on the London Metal Exchange, where it traded at record levels for 11 straight days this month. Prices may stay high as China increases imports and mining companies struggle to expand production.
"There is a global shortage," said Greig Gailey, chief executive of Zinifex, a zinc supplier based in Melbourne. "New mine development is a lengthy process, and it's difficult to see new mines coming on stream in the short to medium term."
Zinifex has no new mines planned until 2008 at the earliest.
Driving the market is China, where a booming economy is stoking demand for the metal, which is used as a rust-resistant coating for steel in buildings, cars and appliances. Rising prices have increased profit for companies like the Swiss company Xstrata and the Canadian company Teck Cominco, the world's biggest zinc miner.
The jump has raised raw material costs for steel makers like Arcelor and Mittal Steel.
Pension funds and speculators are joining the rally in zinc and metals including copper, aluminum and gold, seeking an alternative to stocks and bonds.
Money held by funds tracking commodity-linked indexes will rise 38 percent this year to $110 billion, according to Barclays Capital. Hermes Pensions Management, which oversees Britain's largest pension fund, said two weeks ago that it would invest £1 billion, or about $1.8 billion, of BT Group's retirement plan in commodities including metals.
"Two, three, four, five years ago, we would have seen that with the hedge funds, but not the big state pension funds," Bob Diamond, chief executive of Barclays Capital, said last week. "We are seeing an asset class shift."
LONDON Zinc prices have risen so fast that Robin Bhar, a metals industry analyst for 22 years, is about to raise his forecast for the second time in two months.
"We've all been left behind," said Bhar, who works in London with UBS. "It's just phenomenal. No one in their wildest imagination thought it would get to these levels."
Zinc has almost doubled since July 15 to $2,250 a metric ton on the London Metal Exchange, where it traded at record levels for 11 straight days this month. Prices may stay high as China increases imports and mining companies struggle to expand production.
"There is a global shortage," said Greig Gailey, chief executive of Zinifex, a zinc supplier based in Melbourne. "New mine development is a lengthy process, and it's difficult to see new mines coming on stream in the short to medium term."
Zinifex has no new mines planned until 2008 at the earliest.
Driving the market is China, where a booming economy is stoking demand for the metal, which is used as a rust-resistant coating for steel in buildings, cars and appliances. Rising prices have increased profit for companies like the Swiss company Xstrata and the Canadian company Teck Cominco, the world's biggest zinc miner.
The jump has raised raw material costs for steel makers like Arcelor and Mittal Steel.
Pension funds and speculators are joining the rally in zinc and metals including copper, aluminum and gold, seeking an alternative to stocks and bonds.
Money held by funds tracking commodity-linked indexes will rise 38 percent this year to $110 billion, according to Barclays Capital. Hermes Pensions Management, which oversees Britain's largest pension fund, said two weeks ago that it would invest £1 billion, or about $1.8 billion, of BT Group's retirement plan in commodities including metals.
"Two, three, four, five years ago, we would have seen that with the hedge funds, but not the big state pension funds," Bob Diamond, chief executive of Barclays Capital, said last week. "We are seeing an asset class shift."
LONDON Zinc prices have risen so fast that Robin Bhar, a metals industry analyst for 22 years, is about to raise his forecast for the second time in two months.
"We've all been left behind," said Bhar, who works in London with UBS. "It's just phenomenal. No one in their wildest imagination thought it would get to these levels."
Zinc has almost doubled since July 15 to $2,250 a metric ton on the London Metal Exchange, where it traded at record levels for 11 straight days this month. Prices may stay high as China increases imports and mining companies struggle to expand production.
"There is a global shortage," said Greig Gailey, chief executive of Zinifex, a zinc supplier based in Melbourne. "New mine development is a lengthy process, and it's difficult to see new mines coming on stream in the short to medium term."
Zinifex has no new mines planned until 2008 at the earliest.
Driving the market is China, where a booming economy is stoking demand for the metal, which is used as a rust-resistant coating for steel in buildings, cars and appliances. Rising prices have increased profit for companies like the Swiss company Xstrata and the Canadian company Teck Cominco, the world's biggest zinc miner.
The jump has raised raw material costs for steel makers like Arcelor and Mittal Steel.
Pension funds and speculators are joining the rally in zinc and metals including copper, aluminum and gold, seeking an alternative to stocks and bonds.
Money held by funds tracking commodity-linked indexes will rise 38 percent this year to $110 billion, according to Barclays Capital. Hermes Pensions Management, which oversees Britain's largest pension fund, said two weeks ago that it would invest £1 billion, or about $1.8 billion, of BT Group's retirement plan in commodities including metals.
"Two, three, four, five years ago, we would have seen that with the hedge funds, but not the big state pension funds," Bob Diamond, chief executive of Barclays Capital, said last week. "We are seeing an asset class shift."
