Hi Ho Zinc Both silver and zinc are making records
Zinc hits record high
23/03/2006 16:04 PM
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# Copper, zinc set record highs
# Investors keen on metals
London - Zinc prices hit a record high of $2,540 a tonne on Thursday as warehouse stockpiles extended a decline that can only continue, analysts said.
Zince, used mostly in galvanising to protect against corrosion, has climbed over 80% in the past year while London Metal Exchange (LME) stocks have dwindled to 297 375 tonnes, the lowest since July 1991, with more declines inevitable.
"Zinc's price performance this year is justified by the fundamentals. Essentially, this is because the market cannot be in anything other than a large deficit this year and it will be in a large deficit next year as well," Stephen Briggs, analyst at investment bank SGCIB, said.
On the LME, the the world's largest non-ferrous exchange, zinc had settled at $2,536/2,542 by 10:40 GMT, up from the Wednesday close of $2,520.
Given tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and other uses, more metal will be taken out of stores.
At the end of last year LME stocks stood at 393,600 tonnes, while of the current total some 137,075 tonnes, or 46%, is registered is destined for removal.
"The market started to go into deficit later than the other base metals as the structure of the industry, which is more competitive, meant that cutbacks happened later," Briggs said.
Zinc's strong run has lifted it to a premium over aluminium for the first time in about 13 years.
And buying by investment funds - the key drivers behind the commodity market boom - points to more price gains.
Copper marks time below highs
Copper, used in wiring and construction, was hovering just below the new record highs of $5,186 hit on Tuesday as investors were cautious ahead of the end of the quarter, which also marks the end of a financial year.
But the market's patchy supply picture was highlighted by news of a landslide at a major mine in Indonesia, with prices rising to $5,135/$5,145, up from Wednesday's London close of $5,109.
The landslide killed three people and injured many more on Thursday near a mine run by US firm Freeport-McMoRan Copper & Gold in Indonesia's Papua province, police said.
The incident, which did not disrupt mining operations, occurred as the mine came under fire over its environmental practices.
In late 2003 a series of landslides at the mine severely disrupted output, which returned to normal for the fourth quarter of 2004.
"The real supportive factor at the moment is, despite these two developments, that the company...is going through a period of lower grade ore...producing significantly less copper this year than last year," Peter Richardson, chief metals economist at Deutsche Bank, said.
Another major metal, aluminium, used in consumer durables, was at $2,485/2,489, up from $2,470, with traders watchful of talk that a major Chinese producer was expected to raise its alumina price on Friday or next week.