Chinese demand keeps zinc in playJul 05, 2007 04:30 AM Despite...

Chinese demand keeps zinc in play


Jul 05, 2007 04:30 AM


Despite fears that China may return to its past as a net exporter of zinc, the metal is still a solid bet for investors, experts say.

China's demand for slab zinc is expected to grow 9.5 per cent this year and about 9 per cent next year, said Patricia Mohr, a vice-president of economics with Scotiabank. In 2006, demand in China rose 11 per cent.

"These are very strong growth numbers in terms of demand," said Mohr, noting the growth is fuelled by the demand for galvanized steel.

Mohr said investors looking at zinc should consider waiting until late summer, when stock prices will drop somewhat in response to summer manufacturing slowdowns in Europe and elsewhere. Stock prices should then increase in the fall as demand surges, she said.

China has a massive smelter capacity but a shortage of zinc concentrate, so it has been importing concentrate in massive quantities to produce the refined metal. When it produces a surplus, it exports it, which has some concerned about downward pressure on the price.

Canada's Teck Cominco Ltd. is a major exporter of zinc concentrate, culled from its Red Dog mine in Alaska and shipped to China.

George Topping, a base metals analyst with Blackmont Capital in Toronto, agreed that zinc's fundamentals are strong.

"I'm still very bullish on most commodities, and I think zinc will still continue to do very well," Topping said. He predicts zinc will remain strong for at least three to five years.


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