Zinc trades at all-time high on London Metal ExchangeLast...

Zinc trades at all-time high on London Metal Exchange

Last Update: 7:03 AM ET Apr 26, 2006


SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants.
Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals.
Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories.
Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions.
Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005.
First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades.
Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust.
The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007.
"The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement.
The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.
-Edited by Jarrett Banks