Most of the LME stocks, over 63 percent of them, are in New Orleans, a black hole in terms of zinc's global usage profile. A good portion of them will be locked up in financing deals as is LME tonnage in other locations such as Trieste in Italy or Baltimore in the U.S. The 9,600 tonnes of zinc in the latter hasn't seen any movement since November last year. The 6,550 tonnes in the former last saw any action in June 2009.
Glencore as far I can tell owns most of this zinc they parked where nobody can touch it.
I know this might sound strange but they are effectively treating it a bit like central banks do gold by locking away it fort knox style warehouses in the expectation of future value. Sure hope they don't have another hurricane Katrina :)
If this is really true. Then, of the 848,625t listed as stock on the LME, 550,000t or so is locked up in warehouse financing agreements. That means really that only 300,000t is actually available for purchase today. I don't know if this is right or not but if it's as many suggest, 2013 will be interesting...
I definitely saw Glencore remove 50,000t from Europe and shipped it to New Orleans just before Christmas. Why on earth is 63% of global zinc being stored in one location in the U.S.?
KZL Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
