uk accumulation/pozn article

Probably on the strength of the poZn and with broker valuations at around 12c seems to be getting accumulated at 12/13c.

One assumes it should go high teens to 20s come offtake confirmation and finance.Just how high it goes is reliant on what kind of deal MF comes up with.

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Zinc prices reaching new heights, Galvanized steel prices follow.
General News - 2006 April 2

Zinc prices increased by nearly 124% over the past 12 months.

From 1300 US$/t average price last year April, 1822 US$/t average for December 2005, the average zinc price in March 2006 reached 2383 US$/t and continued it’s march to a current all time high of US$2,550/t. LME zinc stocks reached their lowest level since July 1991, down 26% year-to-date at 290,425 tons.

The main driver of this bull market has been the enormous change in China’s net trade for refined zinc.

In 2005, China consumed 2950.000 tons of primary zinc, compared to 2155.000 tons in 2003 and 2490.000 tons in 2004.

In 2005, China needed to imported 392,000 tons, a 65% increase over 2004, to cover this demand.

Also the galvanized steel market is being driven on by continued strong demand, mostly from Asia.

The increased price has a serious effect on galvanized steel prices, which are continuing to climb to present base price of around $660/tonne. Up in Europe by 10% over last 3 months, up in US went by about $100/tonne to US$700/t up in Asia from $550/t to $690/t. Further price increases have been announced.

Demand and strength in prices are encouraging galvanized steel producers to increase production, with this, increasing further zinc consumption, leading to an improvement in zinc premiums up to around US$155-170/t.

Further expansions in galvanized steel capacity are taking place. Near to 3 million t/y of hot dip galvanizing capacity is added by top Japanese producers (mostly in Japan, but also in China). In China, hot-dipped galvanizing capacity is due to increase by 5m t/y in 2006 to more than 20m t/y.

Forecasts are difficult. Inventories are expected to continue to decrease.

While a further increase to 3000 US$/t might not be excluded, some analysts believe that that cash prices might correct to below $2,000/tonne in the second half of the year.

d.