zinc no longer stinks

  1. 470 Posts.
    By Robin Brumby in Australian today..,.

    ZINC certainly surprised on the upside this week, as they say in the business.
    The consensus for months has been that zinc stinks: there's far too much of it in warehouses, you can't make a decent quid from pulling it out of the ground and mines will have to close. We've recently seen Kagara's cash margin on its zinc operations reduced to a wrenching minus US8c a pound.
    Add in the latest International Monetary Fund gloom -- the prediction this week that non-oil commodities will fall by 14 per cent in 2012 largely due to the European debt mountain -- and you would seem to have an open and shut case. The latest European purchasing manager indices were better than expected, but point to no better than zero growth ahead.
    Then there are those stockpiles at London Metal Exchange warehouses, all 847,950 tonnes of them. That's a little off the 52- week inventory high, but still an awful lot of the galvanising metal to move.

    But here come the traders and ruin a good story. On Tuesday night, zinc jumped 3.2 per cent to $US8355 a tonne. That followed a 2.3 per cent boost on Monday, The speculators are back.
    It may be that traders are looking beyond the present inventory numbers and seeing something better just ahead.
    If so, then David Lennox at Fat Prophets was way ahead of them. He sent out a note last July explaining zinc had been in surplus since mining companies ramped up production as the price zoomed to a high of $US4500 a tonne in 2007. But now we're looking at some big mine closures, with Brunswick in Canada closing this year, Lisheen in Ireland expiring in 2013, followed by another Canadian and a Peruvian operation shutting up shop -- and the Century mine here, too.
    Lennox sticks by his view that investors should be looking at zinc projects set to come on line in the next few years.
    And, we would add, we have yet to find out how many projects have been shelved or postponed due to recent low prices.

    Looks more like David Lennox has been reading our posts!!!
 
Add to My Watchlist
What is My Watchlist?
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.

Currently unlisted public company.

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.