MarkBase-metal Bargains May be Good as Gold:www.marketwatch.com article by By Myra P. Saefong, MarketWatch
Last Update: 7:30 AM ET Jul 20, 2007
Strong demand, short supply good news for these cheaper metal alternatives
Zinc prices trade around $3,500 per metric ton on the London Metal Exchange. That's down from more than $4,500 in December of last year but two years ago, they were trading below $1,500. "Zinc inventories are at critically low levels now," said Pinkowski.
Back in December, experts pointed out a supply deficit for 2006 as well as a price rise of almost 270% between 2004's spot prices for high-grade zinc and the mid-December 2006 level of around $4,400. "Demand for the metal, used to galvanize steel, is growing as world demand is expected to exceed supply this year by 20,000 tons, according to an analyst at Economic Intelligence Unit," said Thomas Winmill, portfolio manager of the Midas Fund
Winmill also points out that the EIU predicts that world demand for zinc will rise to 4% this year, from 3.7% in 2006. Zinc prices climbed 4.5% last week, likely because investors became concerned about falling LME inventories, he said. Zinc inventories fell to 69,350 metric tons -- that's their lowest level in 16 years and 65.9% lower than inventories from a year ago, according to Winmill.
"Just three years ago, inventories were over 10 times greater than they are today," he said.
Zinc has "lots of upside potential over the next coupe of months," said Selwyn Resources' and Yukon Zinc's Meade.
After that, the market may see some new production that will lead to a modest surplus and moderating prices until about 2010, he said. That's when "numerous large mines are depleted and then a very significant supply gap develops."
"There are only a couple of large zinc deposits known in the world that have any hope of filling the major gap that begins in 2010 and accelerates in 2012 when the Century mine in Australia runs out of ore," Meade said. Yukon Zinc is currently in the midst of financing the Wolverine project in Canada, a zinc-copper-lead-silver-gold deposit.
https://www.marketwatch.com/news/story/base-metal-bargains-may-good-gold/story.aspx?guid=%7B7EE3BBD2%2DADD2%2D4C18%2D8CD6%2D14D5586F1E2D%7D