This year the majority of economies continue their growth (more or less) and US and China still play the main driving forces in the growth. Lots of people warry Chinese will become a net exporter and rise the supply so as to reduce zinc price. My analysis is it hard to happen.
Chinese firm export zinc because its previous domestic price is lower than LME one due to government price restriction on strategic materials. Now the two price almost similiar and the export incentive for Chinese firm has reduced. There are some increasing on zinc production due to its profit. But the continuing growth on the world economy causing strong demand can eliminate this increasing. US is still OK, and China will mantain its 9-10 percent growth. Chinese steel production reached 4.2 milliln ton (=US+Japan+India) in 2006. The growth will continue to 2010-2012 at least. There is a linkage between iron & steel production but I do not know the ratio of this. China's zinc exploration and production normally more costly and has created lots of inveromental problem. My analusis is China will permenantly become a large net importer.
ZFX has some problems (it still suffer sell presure) but its fundmental side is still good. No matter what kind of funds play their speculation game, demand and supply will finally determin the price.
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