Zinc Deficit Commentary by Glencore, page-19

METALS-Zinc hits week high as stocks decline, market tightens

• LME zinc stocks fall to lowest since 2009
• Vedanta says zinc fundamentals are tightening
• China approves 13 fixed-asset investment projects

(Updates with official prices)
Zinc prices hit their highest in over a week on Thursday as inventories fell to the lowest levels in nearly seven years and mine closures raised prospects of shortages.
Other base metals prices were mixed, with support from China's announcement of new spending measures to shore up its struggling economy, but weighed down by a firmer dollar.
Zinc inventories in warehouses registered with the London Metal Exchange MZNSTX-TOTAL continued to erode on Thursday, falling to 391,500 tonnes.
The figure is the lowest since July 2009, about two-thirds below the record peak in 2013, although some stock is thought to have been shifted to cheaper storage outside LME warehouses.
"The demand picture is looking fairly healthy and then we've got the ongoing supply tightening. Certainly stocks have started to fall both in China and in London," said Caroline Bain, senior commodities economist at Capital Economics in London.
"The outlook for galvanized steel production is fairly strong. Certainly, it will benefit from stimulus in China and demand will be stronger than last year."
Zinc is mainly used to produce galvanized steel. Three-month zinc on the LME CMZN3 touched an intraday high of $1,934.50 a tonne, the highest since May 3, adding to 3 percent gains on Wednesday. It failed to trade in official open outcry activity and was bid up 0.6 percent at $1,914.
Zinc has been the best performer on the LME over the past month as investors expect shortages to emerge following the closure of major mines such as Century in Australia.
"The availability of spot cargo has just dried up all of a sudden," a trader in Singapore said.
Chief Executive Tom Albanese of Vedanta Resources cited a "progressive tightening" in zinc fundamentals in a media conference call.
Some metals were bolstered after China's state planner approved 13 fixed-asset investment projects totalling 138.8 billion yuan ($21.35 billion) in April.
The news helped to boost interest in commodities that had been hurt after poor corporate earnings results spooked markets over renewed weakness in the global economy.
"We haven't seen enough (negative) data to conclude there will be a steeper correction," said chief investment officer Jonathan Barratt of Ayers Alliance in Sydney.
LME copper CMCU3 was bid up 0.5 percent to $4,730 a tonne in official rings after a 0.6 percent gain in the previous session. Prices dropped to the lowest since April 12 at $4,663.50 a tonne on Tuesday.
A slightly stronger dollar index <.DXY> dampened some metals, hiking prices for buyers outside the United States.
Aluminium CMAL3 traded down 0.4 percent at $1,558 in official activity, lead CMPB3 traded 0.9 percent lower at $1,758, tin CMSN3 traded unchanged at $17,250 and nickel CMNI3 was bid down 0.7 percent at $8,820.
PRICES


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