Well lets hope the fall was exaggerated and we see some stabilising around these levels??
Zinc Gains in London on Speculation Declines Were Exaggerated
By Brett Foley
Feb. 5 (Bloomberg) -- Zinc gained in London, rebounding from the largest weekly drop in at least 17 years, on speculation price declines were exaggerated and demand will keep matching production.
The metal used to galvanize steel more than doubled to a record last year amid rising demand from China. Prices on the London Metal Exchange slumped 15 percent last week as analysts including those at Barclays Capital cut 2007 price forecasts.
``The zinc market will remain relatively tight in the first half and we expect a bounce in pricing, although not to levels we saw last year,'' said Adam Rowley, a London-based analyst with Macquarie Bank.
Zinc for delivery in three months on the London Metal Exchange rose $60, or 2 percent, to $3,140 a metric ton as of 10:44 a.m. local time. It has fallen 25 percent this year.
LME-monitored inventories of zinc dropped for a second day, falling 475 tons to 97,875 tons, the exchange said today in a report. Stockpiles have slumped 73 percent in the past year, driven by increased use in China, the world's biggest consumer of the metal. Zinc, the second-best performer on the LME last year, after nickel, traded at a record $4,580 on Nov. 10.
Barclays Capital, the investment-banking arm of Britain's third-largest lender, last month cut its average 2007 price forecast for zinc to $3,700 a ton from $4,200.
Zinifex Ltd., the world's second-largest producer of the metal, said today prices for zinc aren't likely to match their performance in 2007 as supply catches up with demand.
`Finding Support'
``Zinc is finding some support above $3,100 after Friday's sell-off,'' said John Kemp, a London-based analyst with Sempra Metals Ltd., one of 11 companies trading on the floor of the LME. ``It will remain vulnerable to further pricing pressure as more production comes on line this year.''
Miners such as Canada's Lundin Mining Corp. have increased production of zinc concentrate, the raw material shipped to smelters, to try to capitalize on last year's price gains.
Copper rose, also paring losses recorded late last week, after workers at BHP Billiton Ltd's Cerro Colorado mine in northern Chile voted to approve a wage increase of 4.8 percentage points above inflation.
Copper gained $30, or 0.6 percent, to $5,375 a ton. The metal plunged 4.6 percent on Jan. 2 to trade at its lowest intra-day price since March 29.
Among other metals traded on the LME, nickel advanced $450 to $37,850, aluminum increased $15 to $2,735, and tin gained $300 to $12,000. Lead was unchanged.
To contact the reporter on this story: Brett Foley in London at [email protected]
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