Asia Nikkei reported that International prices of zinc
and lead have rebounded to the highest in about five months amid concerns of a
supply slowdown later this year. But with demand not so strong, prices may fall
back again.
Zinc futures on the London Metal Exchange reached USD 2,200 per tonne up 12%
from a low logged in mid March. Lead futures have shot up 21% to USD 2,030,
while copper has risen only 4%.
Inventories of the two nonferrous metals at LME approved warehouses have
dropped significantly. A staffer at Australian investment bank Macquarie Group
says some buyers are trying to corner the market. Pending shipments of lead
surged from mid March. Zinc stockpiles slipped below 500,000 tonnes for the
first time in about five years.
Australia's Century mine, one of the world's largest sources of zinc that also
produces lead, is expected to slash output later this year as its operations
wind down. Some of the cash windfall created by monetary easing in Europe, the
US and China has been poured into zinc and lead.
Data on open interest at the LME showed net purchases of zinc by investment
funds doubled in the month through mid April. In the case of lead, net selling
turned into net buying by a wide margin.
But real demand is sluggish. Due to a decline in Chinese home prices, demand
for zinc is tepid for its mainstay use to galvanize steel. And slower growth in
new-auto sales in China is putting the brakes on demand for lead, which is used
in car batteries.
Steelguru.com