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Zinc, Discussion
Twobees
post Posted: May 3 2009, 11:55 AM
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http://in.reuters.com/article/privateEquit...143559020090501

-- Andy Home is a Reuters columnist. The opinions expressed are his own. For more Metals Insider columns, top Reuters metals stories and third party content, please visit the free Base Metals Community website at (www.metalsinsider.com)

-- * LME zinc stocks now falling * Unprecedented surge of metal into China * Concentrates market tightening * Can mine supply respond ?


By Andy Home LONDON, May 1 (Reuters) - The LME three-month zinc price has risen 18 percent so far this year, making zinc the third best performer among LME base metals (after copper and lead). Which is somewhat surprising, since the International Lead and Zinc Study Group (ILZSG) has just forecast the global market will record a production-consumption surplus of just over 260,000 tonnes in 2009.

[ID:nLN957124] It will, moreover, be the third consecutive year of surplus, following on a near-300,000-tonne surplus in 2007-2008, according to ILZSG calculations.


Why then the market's relatively exuberant year-to-date
performance ? Is it pricing in a much smaller surplus or even no surplus at all ? The answer could well be a bit of both.


VANISHING VISIBILITY LME stocks, as the most visible expression of market balance, hold the key to what is currently going on in the zinc market. LME inventory rose by 165,000 tonnes last year and surged another 104,250 tonnes in the first two months of 2009, peaking at 362,275 tonnes on Feb. 25.

Since then, however, the flow of metal has reversed and
exchange-registered inventory has fallen by 33,325 tonnes to 328,950 tonnes. That represents a very modest 11 days' of anticipated 2009 consumption.


Compare and contrast with the last peak in LME stocks in
April 2004. Back then they reached 787,150 tonnes, equivalent to 27 days' worth of global consumption. A strong supply-side response to the collapse in demand has
played a big role in mitigating the sort of build seen five
years ago. As Nyrstar, the world's largest producer of zinc metal, hailed in its just-released 2008 report, "the zinc industry responded more widely, quickly and decisively than in previous downturns to the sharp drop in zinc demand".

Nyrstar itself reported a massive 30-percent decline in first quarter 2009 production relative to the preceding quarter (Q4 08).

[ID:nLT544145] However, that is only part of the explanation for the change of trend in LME zinc stocks. The other part comes in the form of the surge in zinc metal
imports into China. The country's trade in zinc has been
extremely volatile in recent years but the current movement of metal is unprecedented, as can be seen in the following graphic.

(here) Part of China's import tonnage has been drawn down from the LME system. It's noticeable that the two key LME zinc locations in Asia, Singapore and Johor, are both showing year-to-date declines of over 10,000 tonnes. The two locations also account for 17,800 tonnes of the total 20,200 tonnes of metal sitting in the cancelled warrant category.

As with other metals, most particularly copper, zinc is benefiting from Beijing's industry support programme. The State Reserve Bureau has bought up 159,000 tonnes and several regional governments have announced their own mechanisms for helping struggling zinc producers.


[ID:nPEK324588] As such, the movement of metal amounts to little more than visible LME surplus being shifted to invisible non-LME surplus. However, as also with copper, the drain on LME stocks is impossible to ignore for LME traders, which is why neither the red metal nor zinc particularly feels like it is in supply-demand surplus.


VANISHING SURPLUS However, it is not just zinc metal that is responding to the open arbitrage between Shanghai and London. Zinc concentrate imports are also rising, up 16 percent in the first quarter of this year. Unlike zinc metal, this may be material the Western market can ill afford to lose. In its spring 2009 forecasts the ILZSG noted that global mine production is expected to fall at a faster pace (6 percent) than refined metal production (4 percent).

This reflects the wholesale closure of marginal mines and
deferral of new projects in response to a zinc price collapse that preceded the global financial turmoil of late last year. It will also leave the zinc concentrates market in small (100,000-tonne) deficit, according to ILZSG. Spot treatment charges (TCs) for smelting concentrate are already falling in response to this building tension in the raw materials market and Nyrstar felt it worth stressing in its Q1 2008 management report that the decline in terms is due only to the current arbitrage and "does not reflect a physical shortage
in the markets for zinc and lead concentrates."

From the other side of the smelter-miner divide, however,
comes a slightly different view. In its Q1 report Canada's Inmet Mining said that "we expect zinc mine production in 2009 to be below smelting requirements, and believe that a balanced or deficit zinc concentrate market could evolve."

Zinc's problem going forwards is that mine supply may have
lost some of the elasticity to higher prices that was seen in 2006-2007, when multiple restarts filled the news headlines. Many of the junior operators that tried to cash in on the bull market rally to over $4,000 were devastated by the timing and severity of the subsequent crash, particularly since it coincided with a severe constriction in credit availability.

The likes of Canada's SRA, Blue Note Metals and Acadian
Mining were not only forced to drastically scale back or even mothball recently-started operations but were sent reeling into bankruptcy protection.

At the same time several important established mines are
fast approaching the end of their lives. Sweden's Lundin, for example, will bring forward to this year from 2011 the permanent closure of its Galmoy mine in Ireland. Its Storliden mine in Sweden closed permanently at the end of last year.


Xstrata's big (250,000-tonne) Brunswick mine in Canada is
also fast approaching the end of the road, currently pencilled in for late next year. Right now none of this seems very relevant while demand is still so bombed out. But the zinc price is begging to differ.

That forecast 2009 metal surplus may look large but it is
fast disappearing into China, even while the raw materials
market looks in danger of swinging from surplus into deficit before the year is out.


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razer
post Posted: Jan 8 2009, 07:13 AM
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In reply to: ComUnNoTerms on Friday 01/08/08 11:32am

Not much support for zinc overnight with a 4c drop from 59c to 55c/lb and the threat of a shutdown to Europe largest zinc mine, the world's fifth largest zinc mine!
BASE METALS
CARE AND MAINTENANCE icon13.gif
Tara, Europe's largest zinc mine, may be closed - again
Irish trade union SIPTU says owner Boliden plans to put the Tara mine on care and maintenance if it doesn't agree to new working conditions at the mine, one of the world's largest zinc producers.

Author: Lawrence Williams
Posted: Wednesday , 07 Jan 2009

LONDON -

According to reports from Ireland, the country's largest mine of any kind, and Europe's largest zinc mining operation (the fifth largest in the world), Tara, may be put on care and maintenance by owner Boliden if the workforce won't agree to new work proposals.

Reuters quotes Ireland's Services, Industrial, Professional & Technical Union (SIPTU) as saying that "The company is proposing to substantially reduce productivity related earnings and revise shift patterns ... If the company goes ahead with its proposal to put the mine on a care and maintenance basis from January 19 this will have a terrible impact on the economy of County Meath"

Tara has been the big success story for the revival of a mining industry in Ireland. It commenced production back in 1977 and has been Europe's largest zinc and lead miner for some years. The operation mines some 2.7 million tonnes of ore annually, which yields zinc and lead concentrates containing up to 200,000 tonnes of zinc and 40,000 tonnes of lead metal. The concentrates are shipped to Boliden's metallurgical plants at Odda in Norway and Kokkola in Finland - but these are both reducing output because of the decline in zinc and lead demand and prices.

This is not the first time Tara has faced a shutdown for economic reasons. Previous owner Outokumpu shut the mine down back in 2001 for two years because of high mining costs. Ownership was subsequently transferred to Boliden in 2004 as part of an asset swap and restructuring of the two Nordic companies.

Boliden and the SIPTU union have been in talks on the implementation of new working conditions since the middle of last month. Boliden said before Christmas that it hadn't made a decision on mine closure, but it was under consideration and with the January 19th deadline looming an announcement is expected soon.













 
ComUnNoTerms
post Posted: Aug 1 2008, 11:32 AM
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In reply to: jahar on Saturday 28/06/08 09:51am

It would appear that Zinc has found support at .80lb and looks to be moving towards a possible uptrend/trend break. Certainly Chinas decision to drop thier Export Tax Break helped.

Zinc Advances in London After China Scraps Tax Break on Exports

By Chanyaporn Chanjaroen

July 31 (Bloomberg) -- Zinc rose on expectations a decision by China, the largest producer and user of the metal, to remove a tax break on exports will curb supply to global markets.

China will withdraw a 5 percent tax rebate for exporters of the best-quality zinc and silver from Aug. 1, the country's State Administration of Taxation said today. Zinc has lost half its value in the past year, declining to a 2 1/2-year low of $1,750 a metric ton on July 4.

``This announcement caused a quick jump in zinc prices,'' John Reade, an analyst at UBS AG in London, wrote today in an e- mailed note. ``This could be a trigger for a sharp move higher to $2,000 a ton or beyond.''

Zinc for delivery in three months advanced $30, or 1.6 percent, to $1,900 a ton as of 4:58 p.m. on the London Metal Exchange.

China's tax change is aimed at trimming a record trade surplus, and reducing pollution and energy use. Zinc output in the country rose 7 percent in the first half to 1.92 million tons, according to the National Bureau of Statistics.

LME stockpiles of the metal gained 1.9 percent to 157,325 tons today, the highest since Sept. 14, 2006. Zinc's canceled warrants, or stockpiles earmarked for withdrawal from LME- registered warehouses, soared a combined 70 percent yesterday and today to 13,475 tons, the highest since April 10, 2007.

Copper inventories grew 4,450 tons, or 3.2 percent, to 142,400 tons, the highest since Feb. 29, according to the exchange's daily data.

Copper Prices

The benchmark copper contract added $35, or 0.4 percent, to $8,065 a ton. It has advanced 21 percent this year and traded at a record $8,940 a ton on July 2.

The gains bolstered profit at Anglo American Plc, the world's fourth-biggest diversified mining business. The London- based company's first-half net rose 27 percent. Anglo has $15 billion of projects under way and is considering more as it seeks to increase growth in metals including copper.

``We expect commodity market fundamentals to remain strong,'' Chief Executive Officer Cynthia Carroll said today at a presentation in London. Chinese demand ``will create the potential for a sustained commodity up-cycle,'' she said.

Lead's canceled warrants jumped 61 percent to 8,325 tons, or 9 percent of total exchange inventories. Almost half of the stocks were scheduled to leave from Long Beach, California.

A lead recycling plant managed by Quemetco Inc. in California was shut after a July 3 fire. It has an annual capacity of 120,000 tons, according to Fortis.

Lead gained $28, or 1.3 percent, to $2,208 a ton.

Among other LME-traded metals, aluminum rose $17, or 0.6 percent, to $2,977 a ton and nickel dropped $300, or 1.6 percent, to $18,450. Tin lost $250 to $22,250 a ton.

-- With reporting by Xiao Yu in Beijing, Carli Lourens in Johannesburg, and Li Xiaowei in Shanghai. Editors: Stuart Wallace, M. Shankar

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: July 31, 2008 12:15 EDT



 
jahar
post Posted: Jun 28 2008, 09:51 AM
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In reply to: bongo67 on Saturday 28/06/08 12:14am

perhaps a new era in zinc; the technology has been evolving with the advent of increasing oil costs; also I hold OZ as part of my Zinifex and Oxiana share holding so I am a little biased (hopeful)


http://www.platts.com/Metals/News/6915858....fined&undefined

The power of zinc: Startup CEO talks zinc-based fuel cells

Washington (Platts)--26Jun2008
Robust supply and softer demand has transformed zinc from a hot to a
lukewarm commodity, but new technology that would make zinc the power running
cell phones and laptops -- and a significant distance down the road -- a fuel
source in hybrid cars, could help launch the base metal's comeback.

Power Air Corp., based in Livermore, California, announced this week it
had entered into a technology-sharing deal with Hawthorne, New Jersey-based
eVionyx to make zinc-based battery units called Powerpacks, that will give
extended-run capability to increasingly sophisticated -- and power-hungry --
mobile electronic devices like Blackberrys, MP3 players, and global
positioning systems.

"People don't know that zinc is a potential energy source," Power Air
President and CEO Donald Ceci, told Platts. "Eventually, if the world was
running on zinc, you'd have sustainable fuel." But, he added, "There's a lot
of development work to be done."

The technology is known as the zinc-air fuel cell, which gets its name
from the underlying chemical reaction that occurs when zinc pellets are mixed
with oxygen from the air, causing zinc oxidation. Lithium is the material
currently used in the batteries powering mobile electronic devices, but
deposits of the commodity are more scattered and scarce than zinc, and
increasingly pricey in the face of insatiable demand for the next big thing in
electronics, Ceci said.

"There's not that much lithium; you get it from salt lakes on the tops of
mountains in Chile and China." While those are not the only regions where the
material is found, he said, "There's certainly not enough to run the world's
hybrid electric vehicles." What's more, Ceci added, "Lithium is getting more
and more expensive because all the portable devices are running on lithium. So
zinc is developing into the next-generation alternative to lithium. We're
pioneering that to an extent."

Although the current crop of hybrid vehicles have fuel cells based on
lithium or hydrogen, the zinc-air fuel cell is safer and better for the
environment, he said. "The nice thing about zinc is, it's nonflammable and
nonexplosive and you end up with zinc oxide as a byproduct, which is totally
recyclable. You don't burn anything up into the atmosphere [so] there's no
emissions." Also, "of all the stable elements, zinc has the highest energy
density, so it is a very good power source," Ceci said.

These qualities could raise the base metal's profile as a fuel source and
drive up its price on the order of metallurgic coal -- the coal used to make
steel -- the price of which has soared on rocketing steel demand from China.
"Broadly speaking, I think this is a trend that going to grow not only in
North America and Europe, but around the world," Bart Melek, a commodities
analyst with BMO Capital Markets, told Platts. "Certainly with oil at
$135-138/barrel, we're going have to use other ways [to get power]."



 
bongo67
post Posted: Jun 28 2008, 12:14 AM
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In reply to: herger on Sunday 08/07/07 07:13pm

One year on from those comments and zinc prices have plunged.

Current LME figures for use are :-

Industry %
Galvanising 47
Brass & bronze 19
Zinc alloying 14
Chemicals 9
Zinc semi-manufacturing 8
Misc 3
Total 100

That Misc figure of 3% may be due for revision with zinc supplementing lithium in Fuel cell use :-

http://www.platts.com/Metals/News/6915858....fined&undefined.

Zinc not so boring at all !!







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herger
post Posted: Jul 8 2007, 07:13 PM
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Good points both. I noticed especially some first hand commentary from someone in the mining industry, posted on SS itself - under off topic forum. The account certainly makes it sound like it's very serious, with no let up in sight.

Still perhaps it's my conservative self coming out, I'm still not comfortable with betting against history. There are many, many unknown factors out there related to supply and demand, which in my mind makes any forecast speculative.

Will be interesting to see how it all turns out!

 

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billyrubin
post Posted: Jul 6 2007, 06:20 PM
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3 related factors need to be considered.
1. zinc usage is hinged to iron ore usage.
2. the start up costs of any new mine are very expensive and getting experienced labour appears to be near on impossible to acquire.so long lag times will continue to exist.
3. lead closely aligned to zinc mineralogy is making a sustained challenge for price parity.


 
ricky99
post Posted: Jul 6 2007, 01:37 PM
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In reply to: herger on Friday 06/07/07 01:12pm

This is a hard one to resolve as you have to factor in each mine that is currently producing (esp the super mines) and what their production forecast is like, are they coming to the end of their natural life, moving on to lower grade ore etc and then you need to try to predict whether new mines will be bought on stream on the dates promised, at the capacity promised or whether they are likely to slip.

That starts to give you the supply side view, then you need to work out the demand side. What will slow it down, what influence will China and India etc have.

While I agree that the current prices will not last forever and everything longterm reverts to the mean - and average longrun profits a company in the near term (3 - 5 years) can still make very good money by looking in some of these prices via longterm hedges. In saying that though you do give away the chance of even higher prices unless you write hedges with open upside and a protected floor.

I'm only into Zinc in a small way via INL and BSM but have noticed that INL is now looking at hedges and for a small company like BSM current zinc prices are a once in a lifetime chance to get good early cashflows so that they can go and play the bigger game.

Also don't forget that a lot of these miners mine a mixture of metals zinc, lead, copper, silver and gold all in the same ore so do have some diversity in the mix

 
herger
post Posted: Jul 6 2007, 01:12 PM
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Re: "there is a lot of money to be made in this sector" - I disagree.

I've done some research using google and my conclusion is that there is a real chance of catastrophe for the zinc price some time in the future.

Take a look at the 5-year zinc price, attached to the bottom of this post.

You'd have to ask yourself, would you buy zinc right now, after it's risen so much?

Keep in mind there's no cartel in zinc like there is for oil. There's no collective global zinc organisation to cut back supplies when supply exceeds demand. In such a situation the POZ will do what it has done for the 50 years, as producers have to compete or price or have customers go elsewhere.

There is an interview with the CEO of Zinifex on the website www.brr.com.au where he makes a comment along the lines of "when the price of zinc has decoupled from the marginal cost of production you know it's not sustainable", and the marginal cost of mine production is much lower than $2, $1, levels.

There's a common view in the markets that supply simply cannot catch up to demand, as demand grows at a quicker pace than supply. In such a situation I can see how the POZ can stay high or even go higher. But you can't ignore the possibility that supply will grow quicker than demand within the next five years. Based purely on historical data this is the most likely scenario. If you look at long term historical charts everytime there's a spike in the price of zinc, or for that matter most other metals such as copper as well, the price spike manages to create enough supply to bring the price back down to around the levels that preceded the spike.

[chart of historical prices obtained from this website: http://minerals.usgs.gov/minerals/pubs/com...zinc/720798.pdf]

Importantly the price spikes never lasted more than 5-10 years.

So based purely on a laymen's knowledge supplemented by information from google and internet searches I reckon there's also a "dark picture" along with the one we're told in the news frequently, about the "super cycle". sad.gif
Attached image(s)
Attached Image

 


 
pukin
post Posted: May 9 2007, 06:30 PM
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Zinc stockpiles down 4800t on LME today... thats about 5%!!!!

We are now getting down to the stockpile levels we were around at the end of november when the Zinc price was above $2 a pound....

 
 


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