zinc hit new high, highest since 1915...LONDON (AFX) - Zinc set a new historic record price in trading at the London Metal Exchange today, surpassing the 4,200 usd per tonne level on strong demand and the lowest supplies in 15 years.
Zinc prices for three-month delivery reached 4,202 usd per tonne on the LME.
The new level is the highest the metal has ever traded since 1915, when trading in the metal began in London, and is up 170 pct over the past year.
Zinc prices reached 4,000 usd for the first time on May 11, before retreating and then rebounding in October. At 1.45 pm, the metal was trading at 4,150 usd.
An analyst at UBS said zinc seems to have replaced copper as the leading base metal.
Zinc prices were supported by a 1.7 pct drop in inventories to 108,950 tonnes, the lowest level since April 1991 and down 70 pct since the start of this year. Current zinc stocks are equivalent to less than four days of global consumption, which stands at around 30,400 tonnes per day -- 11.1 mln tonnes per year -- according to a specialist metals research firm.
Demand has been strongest in China, which is expected to consume 30 pct of the world's zinc demand in 2007.
The analyst added there is robust demand in the auto and construction industries for zinc, but supplies have been limited due to years of under-investment in new mines.
Industrial zinc stocks have diminished to almost 'critical' levels of 100,000 tonnes, with further production shortages sending the price towards 5,000 usd, the analyst added.
According to research carried out by Societe Generale, the zinc market should have a deficit of 420,000 tonnes this year but should return to a balance between supply and demand in 2007, due to the opening of new mines.