chart - target price $1.48, page-34

http://www.commodityonline.com/futures-trading/technical/LME-Zinc-rises-on-demand-expecatons-at-$2370-14846.html

The galvanizing metal, zinc rose with demand expected to rise from the major consuming nations.

The 3-months LME zinc forward prices ended the day at $2,370 per tonne, up by around 0.89%, while making a high of $2,410.75 per tonnes.

Looking at the LME inventory we find that zinc shed 200 tonnes from its existing total of 540,200 tonnes. Moreover, the cancelled warrants ratio, i.e. material set aside for delivery moves slightly higher to 0.008 as compares to the prior days levels of 0.007.

As per the Hunan Nonferrous Metals Holding Group Co, China's zinc demand will rise by at least 10% this year. This expectations push up prices as the demand rises.

Courtesy: Karvy Commtrade Ltd.

http://steelguru.com/news/index/MTM2MzE0/Chinese_zinc_demand_in_2010_seen_up_by_10pct.html

euters reported that China's zinc demand is expected to grow at least 10% in 2010 as the economy continues to thrive.

Mr He Renchun head of Hunan Nonferrous Metals Holding Group said that "As China tries to expand internal demand, construction and automobile industries have good prospects.

Zinc prices are unlikely to fall a lot and are likely to rise. The general trend is upward. But he declined to give a price forecast.

Listed Hunan Nonferrous Metals Company controls Zhuzhou Smelter and Hsikwangshan Twinkling Star Company, the top producers of zinc and antimony, respectively in China, which is the world's biggest producing nation for the 2 metals.

China Minmetals Corporation agreed to buy 51% stake in Hunan Nonferrous Group at the end of 2009. But Mr He said that Hunan Nonferrous will not receive zinc concentrate from Minmetals' Australia operation until OZ Minerals finishes delivering the existing contracts.

Last June, China Minmetals Nonferrous Metals took over most of the assets of Australia's OZ Minerals Limited for about USD 1.4 billion including Century mine.

Mr He expected lead prices to rise too as environmental protection requirements tighten, squeezing out polluting miners. Hunan has large resources of strategic minor metals including antimony, bismuth and indium.

He said that demand for rare metals is growing fast. As polluting and energy guzzling producers are forced out of the industry, the market will become more mature then prices will rise to a reasonable level and stabilize. He added that Hunan Nonferrous produces about 30% to 40% of China's annual antimony output, which is estimated at 80,000 tonnes to 90,000 tonnes.


Zinc fell 0.5 per cent to $2,315 a tonne following a big jump in stocks held at London Metal Exchange warehouses which rose 39,900 tonnes, the largest one-day increase since June 2005. Total LME stocks have reached 541,375 tonnes, the highest since late September 2005.

The International Lead and Zinc Study Group said the zinc market had a supply surplus of 445,000 tonnes last year, the largest since 1993.

Galvanised steel producers account for half of global zinc demand.

Noting that output by galvanised steel producers has recovered strongly, Michael Widmer, metals strategist at Bank of America Merrill Lynch said demand for zinc could increase by as much as 12.5 per cent this year.

But miners have been ramping up zinc production in response to rising prices. Mr Widmer said zinc mine output could increase by 1.1m tonnes this year so a global supply surplus was likely this year.

BofA Merrill Lynch is forecasting zinc to average $2,125 a tonne this year but Mr Widmer is expects prices to average $2,750 a tonne in 2011 as the market shifts to a small supply deficit.