Not in oversupply. Read this article properly and form your own...

Not in oversupply. Read this article properly and form your own conclusions. its being artificially manipulated.

LME FOCUS - Zinc price under pressure, as visible inventory builds up

BaseMetals.com

Zinc prices fell to their lowest for just over a month on the LME on Wednesday, due to warehouse inventories rising to their highest since late-October last year, and further stock increases are expected.

Warehouse stocks leapt 5,050 tonnes, or five percent, to 106,800 tonnes, to their highest since October 31 last year. Today's increase reflected an unusual shipment into Dubai, but further stock rises are expected in general, as off-warrant stockpiles are registered.

However, the stock build-up is somewhat illusory, as much of the recently-warranted metal is 'window-dressing' and not easily available.

"It has been put there for show only," an LME floor trader said.

Since the start of this month, LME zinc stocks have risen 13,275 tonnes, or 14.2 percent. A long-running inventory downtrend bottomed out in December 2006, when stocks fell to 84,825 tonnes, the lowest since 1991.

Traders said the warranting over the last week is part of a 15,000 increase. This is metal which has been off-warrant for some time.

"However, it is highly unlikely that this material will show up in the clearing as it almost certainly forms part of a 'term financing swap'," another trader said.

An international merchant is said to be 'parking' metal in some regions which are less easy to remove metal from -- Singapore and Johor, as well as Dubai. This shows up in reported stocks and depresses prices on the LME. Prices fell three percent on Wednesday to $3,120 a tonne, down $100 from Tuesday.

The inventory operation may also be designed to influence ongoing annual TC/RC (treatment charges/refining costs) negotiations between producers and smelters.

No benchmark has been set as yet, but a level of $300 a tonne is being favoured