Re: Prices and ''08 zinc forecast...Prices continue to climb because inventories are flat to down despite all the doom and gloom.
The so-called "surplus" in '08 is unlikely to be anywhere as big as expected (in any event, the "surplus" was pretty small - ~150,000 tns in a 12MM tpa market). Reading Abare's recent '08 zinc "forecast", the schmucks were including the Perkoa, Dairi and Ozernoye projects. Both Perkoa and Dairi are delayed. Dairi doesn't even have permits yet - looks like mid '09 at best. Perkoa is starting in Q1 '09.
But the most egregious error in their "forecast" is the inclusion of Lundin's Ozernoye deposit in Russia (similar grade and northern location as Pine Point). Lundin says they "hope" to get their FS finished in '08 and "hope" to be in production in 2012. Ozernoye is a big project - 300,000 tpa and $500MM (vs 120-160,000 tpa for TAM and $100MM). Ozernoye alone is 2.5% of world supply.
Abare is calling for 4% supply growth in '08. Perkoa, Dairi and Ozernoye are 4% of world supply. None of them will come online in '08 as "forecast" and Ozernoye won't arrive until 2012. And only part of the 180,000 tonnes (perhaps 120,000 tn) from Perkoa and Dairi will be online in '09.
No wonder the market gets its panties in a bunch all the time. Crap supply/demand "forecasts" seems rampant in the sector. Yet people still take these guys seriously. When will the market realize the so-called "experts" making these "forecasts" are people who always forget that supply never arrives on time, that projects suffer problems and that production rarely meets forecasts?