Warehousing companies will increase the rent they charge clients to store zinc at their facilities. Most are upping their charges by about 10.5% on average.
I believe the new charges will apply from April 1 2012. This cost need to be recouped at some level, so we could see prices move up 10% between now and April.
This is a bit of extortion on the part of JP Morgan & co. They buy zinc directly from the likes of Terramin etc and then sell it to a trader who shifts it from Europe to park it in long-term holding warehouses in the US and then gets hit with a 10% storage surcharge by the very guys who own the warehouses and sold them the zinc in the first place.
Only way to recoup it is to demand that zinc customers pay 10% more. Who benefits? JP Morgan...unbelievable how these guys just keep hitting you at both end of the trade...
This might improve headline zinc sentiment as shorts are forced to close out, but keep in mind that should prices move up 10% in the near term, the benefits flow to the warehouse owners, not KLZ as such.
KZL Price at posting:
25.5¢ Sentiment: LT Buy Disclosure: Held
