# Zinc the metal for 2006



## YOUNG_TRADER

Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Here's my prefered stock exposure

*TZN* Terramin
I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file

To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out


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## michael_selway

YOUNG_TRADER said:
			
		

> Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
> 
> 
> Here's my prefered stock exposure
> 
> *TZN* Terramin
> I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file
> 
> To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out




Hi comsec no forecasts EPS out for this atm, but do u think u can estimate forecast EPS for 2006, 2007 and 2008 based on your research u can share with us?

thx

MS


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## Joe Blow

Is this thread about zinc or TZN?

If it is about zinc then I hope we are going to see some discussion on that topic. If it is about TZN then I'm not quite sure why this thread was created when there is already a TZN thread.


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## clowboy

Seems to me it is about tzn.

happy with zinc setting new highs again, for a while it had me worried


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## michael_selway

clowboy said:
			
		

> Seems to me it is about tzn.
> 
> happy with zinc setting new highs again, for a while it had me worried




Yeah same 

the recent price correction for zinc was scary, but fundamentally its stillstrong, when u look at LME supplies





thx

MS


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## nizar

http://www.miningweekly.co.za/min/news/today/?show=83131

Upbeat metals hover near new record highs
--------------------------------------------------------------------------------

Major base metals were holding close to new highs on Wednesday, with some profit-taking seen, although analysts said the industrial metals complex looks comfortable at current high levels.

Benchmark metal copper was trading at $5 115 a tonne by 10:40 GMT, up from Tuesday's London close of $5 105 on the London Metal Exchange (LME).

The metal, which is used in construction and electronics, hit a record high of $5 186 on Tuesday. Zinc, used in galvanising to protect steel from corrosion, hit a new record of $2 525 on Wednesday, up from $2,510.

In precious metals, silver hit a fresh 22-year peak of $10,59 an ounce, as speculators ploughed more money into the market after US regulators approved an exchange-traded fund.

"People sold copper yesterday at the highs, and but have been quick to buy back short positions and are looking to go long again this morning," one dealer said.

"We are seeing buying, not only from the speculators, but also from consumers. Fund buying is undoubtedly the main driver, but there is underlying demand from industry," he said.

Consumers have become more comfortable with copper at the previously unthinkable levels between $4 500 to $5 000, and price rises have been passed down through the chain, traders said.

But some sounded a warning note, as market sentiment has become more realistic after a month-long corrective phase halted what had become an almost vertical ascent in major metals in early-February.

"All in all, it is hard to feel too confident about copper's recent bout of strength and the move above $5 100 runs the risk of turning out to be a false break-out," William Adams, an analyst for BaseMetals.com, said in his Tuesday evening note.

With the tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and household use, zinc prices have risen more than 30% since the end of last year.

LME zinc stocks fell another 3 000 t on Wednesday to exactly 300 000 t, the lowest since July 2001. At the end of last year stocks stood at 393 600 t.

Zinc's strong run has lifted it to a premium over aluminium for the first time in about 13 years, analysts said.

Aluminium, a lightweight metal used widely in consumer durables, traded at $2 498, against a previous close of $2 500. Earlier this year aluminium traded as high as $2 678, the highest for 17-1/2 years.


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## YOUNG_TRADER

*Zinc Stocks-*

Ok I started a thread here yesterday and it has been deleted, please don't delete this thread, as we have one for Gold, Oil and Uranium we should have one for Zinc as it will be the base metal of 2006.

Stocks which should be covered by this thread,

*AIM JML UCL TZN*

I already have a comparative analysis for JML vs TZN am updating to include AIM and UCL, when I'm done, someone tell me how to upload the excel sheet as an inserted image or something, Cheers


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## YOUNG_TRADER

*Re: Zinc Stocks-*

Also note, stocks like KZL PEM and ZFX have to a large extent run and are covered by any analysts so no need to re-cover them, rather can use some of the assumptions made on these stocks to assist in 'our' thoughts on the four stocks I listed


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## YOUNG_TRADER

*Re: Zinc Stocks-*

The main reason why Zinc will be the standout metal for 2006 and probably into 2007 is due to the large deficits in supply, ie demand has been and will continue to outstrip supply thus causing the very low LME stock piles to drop even lower,


Zinc Rises to Record After Stockpiles Slump, Curbing Supply 
March 22 (Bloomberg) -- Zinc rose to a record in London for a second consecutive day after stockpiles shrank, curbing supply of the metal used to protect steel from corrosion. 

Inventory tracked by the London Metal Exchange fell 2,700 tons, or 0.9 percent, to 300,000 tons, the LME said today. Inventory has slumped 48 percent in the past year. Consumers may have to rely on stockpiles to fill a forecast production shortfall. 

``Zinc stockpiles keep coming down,'' Andrew Silver, a trader at Natexis Commodity Markets in London, said in an interview. *``Consumers are still buying at high prices.'' *


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## wayneL

Folks, 

There were two Zinc threads going so I've merged the two.

Cheers


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## YOUNG_TRADER

Ahh here's my lost thread, Wayne did you move the 2nd one I started as well?

I want it to be about Zinc Stocks, with some small commentary on Zinc, can't it be where the others are (ie where it was) with the Gold Stocks thread, Oil Stocks thread Uranium stocks, Solar stocks etc etc?


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## wayneL

YT,

It gets a bit confusing if there are two current threads going. Most of the Zinc stocks have their own threads, or if there isn't a thread on a particular stock, you can open one.

But Zinc in general should be all in one place...Because it's currently very topical, if you know what I mean. Otherwise the analysis becomes divided, or one thread will whither and die anyway.

It's just to keep things tidy  

Cheers


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## YOUNG_TRADER

Fair enough, can you tell me how to upload an excel sheet on this msg so I can show my comparative valuations for JML vs TZN?


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## wayneL

YT,

Just use the "manage attachements" button below the "reply to thread" screen.

Just like attaching an image.

https://www.aussiestockforums.com/forums/faq.php?faq=vb_read_and_post#faq_vb_attachment_explain


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## YOUNG_TRADER

Did it work?


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## YOUNG_TRADER

Here's an updated sheet I did before,


Comments,

*JML: * Is also reliant on Copper for its revenue, due to the fact that later on in 2006 we will see huge surpluses for Copper the price will not hold at current levels for too long. However may see a bidding war for Takeover by OXR and CSM, Project is fully funded, unhedged and construction is well underway, JML represents the lowest risk of the four, with good long term returns in store.

*AIM:* Project looks the goods, but requires huge levels of finance and may not be able to come on line until mid 2008, stock has also run strong from 7c - 14c

*TZN: * Angas is as they a done deal, it will come on line and funding required is only $35m, has Macquarie and Sempra in its stables so funding not an issue, Angas alone should underwrite a value of $1.35, Real blue sky comes from North African project which has an in ground value of $3.5b

*UCL*The largest project by far, requiring the most funding by far and in Iran which makes it the riskiest by far!


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## nizar

http://today.reuters.com/business/n...BusinessNews&storyID=nL23748560&imageid=&cap=

UPDATE 4-Zinc and copper hit record highs, funds buying

By Martin Hayes 

LONDON, March 23 (Reuters) - Investment fund buying re-emerged on the London Metal Exchange (LME) on Thursday, lifting copper and zinc to record highs. 

Copper, the LME's benchmark metal, hit a new peak of $5,250, bolstered by supply worries and a mudslide at a major mine in Asia, while tin broke $8,000 to a 10-month high. 

*Zinc prices also hit a record of $2,585 a tonne on Thursday as warehouse stockpiles extended a decline that can only continue, analysts said. * 

Zinc, used mostly in galvanising to protect against corrosion, has climbed over 80 percent in the past year while *LME stocks have dwindled to 297,375 tonnes, the lowest since July 1991, with more declines inevitable. * 

*"Zinc's price performance this year is justified by the fundamentals.* Essentially, this is because the market cannot be in anything other than a large deficit this year and it will be in a large deficit next year as well," Stephen Briggs, analyst at investment bank SGCIB, said. 

On the LME, the world's largest non-ferrous exchange, zinc <MZN3> closed at $2,571 in the open-outcry session, up two percent from the Wednesday close of $2,520. 

*Given tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and other uses, more metal will be taken out of stores. * 

*At the end of last year LME stocks stood at 393,600 tonnes, while of the current total some 137,075 tonnes, or 46 percent, is registered is destined for removal. * 

"The market started to go into deficit later than the other base metals as the structure of the industry, which is more competitive, meant that cutbacks happened later," Briggs said. 

Zinc's strong run has lifted it to a premium over aluminium for the first time in about 13 years. 

*Buying by investment funds -- the key drivers behind the commodity market boom -- points to more price gains. *


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## YOUNG_TRADER

Zinc where's it at? ? ? 

 $3,000 US/t you say?    


Zinc where it headed? ? ?  ? ?

 $4,000 us/t by July 06


Are you crazy Young Trader? ? ? ? ?

I sure am!!!! Crazy about Zinc!


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## brerwallabi

YOUNG_TRADER said:
			
		

> Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!



Hello, where have you been please carry on buying laughing all the way to the bank. I am so pleased that all of a sudden that Generation whatever have discovered Zinc. I always tried to keep it a secret but somehow the word must have got out.


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## michael_selway

YOUNG_TRADER said:
			
		

> Zinc where's it at? ? ?
> 
> $3,000 US/t you say?
> 
> 
> Zinc where it headed? ? ?  ? ?
> 
> $4,000 us/t by July 06
> 
> 
> Are you crazy Young Trader? ? ? ? ?
> 
> I sure am!!!! Crazy about Zinc!




Do u know what, i think Zinc LME stocks will go down to 0 by Oct 2006

I know that in mid 2007 supply will exceed demand as forecast by many, however its too late!

In which case yes it will go to $4,000 us/t, but not only that, since its so low, it may turn into a huge bubble, looking at $10,000+ us/t which may last a few months before it crashes back to normal levels like maybe $4,000 us/t?

Time to put your house on zinc stocks u think? or wait a bit longer first and see if the LME supplies can reach closer to 0?

Just a thought   

thx

MS


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## professor_frink

michael_selway said:
			
		

> Do u know what, i think Zinc LME stocks will go down to 0 by Oct 2006
> 
> I know that in mid 2007 supply will exceed demand as forecast by many, however its too late!
> 
> In which case yes it will go to $4,000 us/t, but not only that, since its so low, it may turn into a huge bubble, looking at $10,000+ us/t which may last a few months before it crashes back to normal levels like maybe $4,000 us/t?
> 
> Time to put your house on zinc stocks u think? or wait a bit longer first and see if the LME supplies can reach closer to 0?
> 
> Just a thought
> 
> thx
> 
> MS




Hey MS, seen as though your a fundie you could probably answer this- what would be fair value on ZFX at 10,00 us/t?


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## michael_selway

professor_frink said:
			
		

> Hey MS, seen as though your a fundie you could probably answer this- what would be fair value on ZFX at 10,00 us/t?




hm if assuming $10,000+ is only a shorterm thing (a few months)...ZFX can probabaly reach a peak of $25-30. However if it is a longer term (6-12months) thing $35-40. It really depends on the supply increase response in 2007 as analysts have forecasted

Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 35.9 149.5 185.0 141.6 
DPS 4.0 32.5 44.0 29.0 

thx

MS


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## professor_frink

michael_selway said:
			
		

> hm if assuming $10,000+ is only a shorterm thing (a few months)...ZFX can probabaly reach a peak of $25-30. However if it is a longer term (6-12months) thing $35-40. It really depends on the supply increase response in 2007 as analysts have forecasted
> 
> Earnings and Dividends Forecast (cents per share)
> 2005 2006 2007 2008
> EPS 35.9 149.5 185.0 141.6
> DPS 4.0 32.5 44.0 29.0
> 
> thx
> 
> MS



cheers mate- will try not to let that influence my T/A too much!


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## tech/a

INL

Been on this a week,may slip under the zinc radar.


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## michael_selway

tech/a said:
			
		

> INL
> 
> Been on this a week,may slip under the zinc radar.




Hi is INL producing/selling zinc currently?

professor_frink how do you see ZFX techically?

Also the above assumes no external factors affecting All Ords in general

thx

MS


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## tech/a

Michael.

yes.
they also have a way of extracting from tailings as well as a mine.

I'm no fundie but thats all I know plus they are technically strong,I traded a breakout on volume.Nothing magical.


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## YOUNG_TRADER

Intec *CLAIMS* to have found a solution to recovering huge amounts of zinc from tailing dam stock piles, yet it hasn't been proven on a fully operational basis,


Worley Parsons are doing the BFS for them, I'm pretty sure the pilot plant worked but still there is risk, ie recovery, floatation, if the chemicals don't work properly etc, if it works though it would be worth well over $1 BILLION from memory, but thats if it works,



My opinion, buy companies that are in production or will be very soon,

My favourites are CBH, TZN, JML, I don't hold CBH yet, will wait a bit as a lot of issues @ 26c recently should put lid, I hold JML and TZN


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## nizar

My favourites are KZL and CBH


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## Kipp

Heya Folks,
could someone explain the LME stockpiling system or direct em to a link that does.  Obviously from the Zinc and Nickel charts it is intimately (and inversely) linked to prices.  But surely the LME only controls stockpiles for the for the U.K. so it doesn't have control over GLOBAL commodity prices?

And Michael- I enjoy your posts but aren't you getting a bit carried away with commsec and their forecasts?  How accurate are they really?  I mean the MAp EPS forecast was something pathetic like 15c for 2006...  Are they any other brokers/websites offering free forecast services?


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## michael_selway

Kipp said:
			
		

> Heya Folks,
> could someone explain the LME stockpiling system or direct em to a link that does.  Obviously from the Zinc and Nickel charts it is intimately (and inversely) linked to prices.  But surely the LME only controls stockpiles for the for the U.K. so it doesn't have control over GLOBAL commodity prices?
> 
> And Michael- I enjoy your posts but aren't you getting a bit carried away with commsec and their forecasts?  How accurate are they really?  I mean the MAp EPS forecast was something pathetic like 15c for 2006...  Are they any other brokers/websites offering free forecast services?




LME is kind of like a warehouse for global base metal storage, usualy excess supply over demand will be added and when demand exceeds supply, it will be shipped out ("cancelled" first). The other places where they store basemetals is Nymex (Comex) and Shanghai although they only hold Copper and Aluminium below are the links

http://www.kitcometals.com/charts/lmewarehouse.html
http://www.kitcometals.com/charts/nymexwarehouse.html
http://www.shfe.com.cn/estatements/secondpage.jsp?subjectpid=905&subjectid=9053&startpage=1

Btw what do u mean when u say LME stocks being inversely linked to prices for Nickel? For Zinc I understand your point









Well in regards to MAP, MIG, BBI having decreasing EPS (high forward PEs), i think someone mentioned to me before that its due to "devaluations" of their assets rather decreasing cashflows problems for these infrastruture stocks.

MAP - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 68.8 46.3 53.4 18.5 
DPS 20.0 25.0 27.5 30.0

MIG - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 43.8 34.4 15.5 9.4 
DPS 77.5 21.0 23.0 25.0 

BBI - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS -0.8 5.4 3.4 4.5 
DPS 10.6 13.0 13.5 14.3 

Comsec forecasts are just consensus forecasts of the many brokers out there. Whether they evenuate is another story but they are legitamite forecasts. Just have to make sure they are updated.

You can read free broker news below (broker news archive), which have foreacasts and target prices yes.

http://www.sharecafe.com.au/quote.asp

thx

MS

Thermal Coal


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## Kipp

michael_selway said:
			
		

> LME is kind of like a warehouse for global base metal storage, usualy excess supply over demand will be added and when demand exceeds supply, it will be shipped out ("cancelled" first). The other places where they store basemetals is Nymex (Comex) and Shanghai although they only hold Copper and Aluminium below are the links



Thanks for that, and the links.


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## yogi-in-oz

Hi folks,

As requested Michael, we started on a long analysis
on zinc prices, but not having any recent historical
data, it proved too complex ..... 

..... suffice to say, we expect more of the same from
zinc prices, until about the  December 2007 solstice
18-24122007.

-----

For most traders, it is more PRACTICAL to analyze the 
individual zinc stocks. While the zinc price may be
the fundamental driver for the industry as a whole,
not all those stocks will participate at the same time,
due to a wide variation in their own natural cycles.

-----

In fact, we can line up all the zinc stocks mentioned in
this thread, around the 360 degree dial and come up
with a likely sequence, WHEN they will react to the 
same cycle one-by-one, as each aspect progresses,
around the dial.

For example, right now, we can see that JML should be
triggered on 12-13072006, with ZFX a few days later,
on 17072006 ..... 

Then, for the same cycle, the order goes AIM, INL, KZL,
TZN, CBH and UCL, all on different dates ..... 

-----

..... and on ZFX ..... so, you think it's high now???

Come back in December 2006 for another look, 
but more importantly will be the run up into
December 2007 ..... should be HUGE !~!

If we get time on this end, this could be a good 
project ..... "tag-the-zinc-stock" ..... lol

have a great weekend all

         yogi


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## professor_frink

yogi-in-oz said:
			
		

> Hi folks,
> 
> As requested Michael, we started on a long analysis
> on zinc prices, but not having any recent historical
> data, it proved too complex .....
> 
> ..... suffice to say, we expect more of the same from
> zinc prices, until about the  December 2007 solstice
> 18-24122007.
> 
> -----
> 
> For most traders, it is more PRACTICAL to analyze the
> individual zinc stocks. While the zinc price may be
> the fundamental driver for the industry as a whole,
> not all those stocks will participate at the same time,
> due to a wide variation in their own natural cycles.
> 
> -----
> 
> In fact, we can line up all the zinc stocks mentioned in
> this thread, around the 360 degree dial and come up
> with a likely sequence, WHEN they will react to the
> same cycle one-by-one, as each aspect progresses,
> around the dial.
> 
> For example, right now, we can see that JML should be
> triggered on 12-13072006, with ZFX a few days later,
> on 17072006 .....
> 
> Then, for the same cycle, the order goes AIM, INL, KZL,
> TZN, CBH and UCL, all on different dates .....
> 
> -----
> 
> ..... and on ZFX ..... so, you think it's high now???
> 
> Come back in December 2006 for another look,
> but more importantly will be the run up into
> December 2007 ..... should be HUGE !~!
> 
> If we get time on this end, this could be a good
> project ..... "tag-the-zinc-stock" ..... lol
> 
> have a great weekend all
> 
> yogi




Hi yogi, when you say that a stock should be "triggered" on a certain date, what exactly do you mean?


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## michael_selway

yogi-in-oz said:
			
		

> Hi folks,
> 
> As requested Michael, we started on a long analysis
> on zinc prices, but not having any recent historical
> data, it proved too complex .....
> 
> ..... suffice to say, we expect more of the same from
> zinc prices, until about the  December 2007 solstice
> 18-24122007.
> 
> ..... and on ZFX ..... so, you think it's high now???
> 
> Come back in December 2006 for another look,
> but more importantly will be the run up into
> December 2007 ..... should be HUGE !~!
> 
> If we get time on this end, this could be a good
> project ..... "tag-the-zinc-stock" ..... lol
> 
> have a great weekend all
> 
> yogi




Hi Yogi thanks for that

Just wondering when you say "should be HUGE" is that according to the "stars", your own personal view, or just the view based on LME supplies are decreasing in general. Thanks

Also does it say about PEM and KZL?

MS


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## yogi-in-oz

Hi Frinkle,

Gann got into Sepharial's head, about a century ago and 
came up with the theory, that every market has its own
individual time cycle signature or "natural vibration" ... 

Being a very clever pom, our astrologer Sepharial also
obliged us, by writing extensively about his observations.

Such vibrations are really points on the 360 degree dial,
where a particular market (or stock) will see a change in
traders' sentiment, as a planet transits such points OR
makes a common geometric aspect to those point(s).

Very simple stuff, but also quite effective in confirming
our technical analysis, in most markets.

  have a great weekend

     yogi


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## yogi-in-oz

Hi MS,

..... no consideration given to LME stockpiles, at all.

That "HUGE" was referring to ZFX astroanalysis, as not only
will it be enjoying some very favourable sentiment, in its
own right ..... but,  we also see one ruler of zinc making a 
rendezvous with the ruler of all things underground, at late 
degrees in the sign, so there will likely be a significant 
"expansion" in zinc, including the price ..... 

..... that may end quite abruptly, after the December 2007
solstice ..... 

-----

On KZL example ..... that same time cycle should be positive
around, 28072006 and PEM  very soon after, on 28-31072006
and should also show positive sentiment ... ???

Given the positive outlook for zinc stocks, we will probably 
work slowly through each zinc stock, posting  key dates and 
supporting analysis, as we go ..... 

happy days

  yogi


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## michael_selway

yogi-in-oz said:
			
		

> Hi MS,
> 
> ..... no consideration given to LME stockpiles, at all.
> 
> That "HUGE" was referring to ZFX astroanalysis, as not only
> will it be enjoying some very favourable sentiment, in its
> own right ..... but,  we also see one ruler of zinc making a
> rendezvous with the ruler of all things underground, at late
> degrees in the sign, so there will likely be a significant
> "expansion" in zinc, including the price .....
> 
> ..... that may end quite abruptly, after the December 2007
> solstice .....
> 
> -----
> 
> On KZL example ..... that same time cycle should be positive
> around, 28072006 and PEM  very soon after, on 28-31072006
> and should also show positive sentiment ... ???
> 
> Given the positive outlook for zinc stocks, we will probably
> work slowly through each zinc stock, posting  key dates and
> supporting analysis, as we go .....
> 
> happy days
> 
> yogi




wow amazing thanks, i see soemthing huge in ZFX also by year end (mainly to do with zinc prices, and also all that cashflow possible M&A)   

thx

MS


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## professor_frink

zinc made a big move overnight. Should be interesting to see what the zinc stocks get up to on monday


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## rederob

Pro FrinK
Toss up a chart of nickel and compare the 2 over the last month.
Money ebbs and flows, and while zinc will get a fair share, the new kid on the block is also looking good.


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## professor_frink

no worries mate. I've put the 5 year for both up as well. Enjoy your weekend.


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## rederob

Pro Fink
Putting the above into perspective:
Nickel rose by $750 overnight.
As zinc is presently trading at $3300/tonne, nickels' dollar price rise was equivalent to adding 22% to zinc overnight.
Let me put it in a longer term perspective: In the last month nickel prices have risen by over $4450/tonne.
In other words the total price of zinc would need to rise over $1000 just to match the price rise of nickel in the last month alone.
Now I am in love with zinc this year, but the markets require perspective.


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## professor_frink

rederob said:
			
		

> Pro Fink
> Putting the above into perspective:
> Nickel rose by $750 overnight.
> As zinc is presently trading at $3300/tonne, nickels' dollar price rise was equivalent to adding 22% to zinc overnight.
> Let me put it in a longer term perspective: In the last month nickel prices have risen by over $4450/tonne.
> In other words the total price of zinc would need to rise over $1000 just to match the price rise of nickel in the last month alone.
> Now I am in love with zinc this year, but the markets require perspective.




interesting point you make there. I actually think nickel can be used as an example to how the rest of the base metals could move down the track, this just theory based on looking at charts, but if you look at nickel, it started it's run before most of the other metals did. After nickel had it's big parabolic move, it stayed in a trading range until it's recent breakout- didn't completely collapse, just paused, until now. If all of the other base metals perform in a similar way over the next few years, this commodities bull will be going on for a long time yet!
Am I saying we are in a supercycle? not necessarily, but it makes me more confident that we aren't even close to the top yet.
At the moment I'm in love with zinc, not because of any personal preference for the metal, it's just that out of all the stocks that have options on them, zfx is by far the easiest to trade, and is moving the quickest!!


p.s yogi, thanks for the reply, i completely missed your post this morning, i was very hungover


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## rederob

professor_frink said:
			
		

> If all of the other base metals perform in a similar way over the next few years, this commodities bull will be going on for a long time yet!



qed


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## nizar

rederob

the pie chart u attached of your current holdings, is that by: $ invested or current market value ?


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## RichKid

FYI: There was an interview today with the Zinifex boss by Alan Kohler on InsideBusiness on TV, discussed the Zinc price.


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## rederob

nizar said:
			
		

> rederob
> 
> the pie chart u attached of your current holdings, is that by: $ invested or current market value ?



nizar
It's my Comsec CHESS holdings by present value - taken direct from the Position Summary" in Comsec's website.
I still hold some HIN statements on TLS, BSL SUN and AMP from investments made in late 90s.


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## nizar

RichKid said:
			
		

> FYI: There was an interview today with the Zinifex boss by Alan Kohler on InsideBusiness on TV, discussed the Zinc price.




What did he say?

Let me guess, the price will go up more? LOL


----------



## Halba

it'll be interesting to see ZFX quarterly report this week..hopefully no big dramas...they really need to expand their production if they can


----------



## michael_selway

*Zinifex rides wave of commodities boom
Date : 23/04/2006
Reporter: Alan Kohler*

ALAN KOHLER: When the zinc miner, Zinifex was floated out of the wreckage of Pasminco two years ago it had few friends and dubious prospects. Memories were still fresh about how panicking banks scuttled the one-time great mining house which was then wallowing under $3 billion of debt, a disastrous hedge-play and an abundant supply of a rather unfashionable metal. Well, as you can see from this graph, Zinifex is the champion surfer of the commodities wave, easily outpacing even the extraordinary performances of its peers, like BHP Billiton thanks to its relatively pure zinc play. I spoke to Zinifex boss Greg Gailey who's been at the helm through the highs and the lows. 

Greig Gailey, Zinifex floated from the ashes of Pasminco a couple of years ago for less than $2, it's now more than $11, capitalised at $5.5 billion. I guess its ironic, isn't it, that Pasminco went broke betting that the zinc price would do exactly what it's done, it was just too early. 

GREIG GAILEY, CEO, ZINIFEX: Pasminco's problems were complex and it failed for a number of reasons. However, Zinifex has had a spectacular performance since it listed in April of 2004. 

ALAN KOHLER: I guess you're pretty happy you decided to stick around? You were appointed about a month before the company collapsed, I think? 

GREIG GAILEY, CEO, ZINIFEX: That's correct. 

ALAN KOHLER: It must have been tempting when the collapse occurred to bail out. 

GREIG GAILEY, CEO, ZINIFEX: It was. However the three years, Alan, in all honesty, was the most fantastic career experience one could ever have. I mean to take a public company through administration which not many CEO's quite frankly would like to do, and I don't blame them for that, but that was an enormous learning experience to restructure it in the way that I was able to do and to bring it back to market as Zinifex and then see the spectacular success is just an amazing experience and it's a true tribute to all of the people in the company that worked so hard to create what Zinifex is today. 

ALAN KOHLER: Now obviously as you say, no-one predicted what would happen to the zinc price, but do you think what's happening to the zinc price now is rational? 

GREIG GAILEY, CEO, ZINIFEX: Absolutely in the sense that, really the seeds of where we are today were sown in the early 2000's. It was pretty miserable time in zinc. Nobody made any money, companies like Pasminco failed, and as a result of that, nobody did any exploration, nobody was interested in developing zinc mines and what we're seeing today is the fruits of that, i.e. there's an acute shortage of raw material. 

ALAN KOHLER: So do you believe that this current price can now be sustained? 

GREIG GAILEY, CEO, ZINIFEX: Well if you look at the cure, which is more raw material coming to market, it takes today somewhere in the order of three to five years to develop a new zinc mine. We have a very large deposit in Queensland called Dugald River, which is about 50 million tonnes, so it's half the size of Century, could be a very substantial mine. We're currently in the phase of doing a pre-feasibility study but even if we fast track that project through, i.e. we said feasibility then immediately into development, it would not be in the market before 2010 or 2011. 

ALAN KOHLER: I've been reading some analyst reports which say that zinc, unlike other minerals, tend to be small mines, small deposits, more easily developed than others, and that there are - this was Merrill Lynch - has identified 234 potential zinc mines in the world. I mean it is likely isn't it that there will be much more of a response to the price in terms of supply, than you can come up with? 

GREIG GAILEY, CEO, ZINIFEX: Well there certainly will be a response to price but we believe it will be somewhat slow in coming and even though there are a lot of zinc mines, many of them are very small, and not only that - the other issue that plays in here - because there was no exploration carried out during this period, many of the deposits that are being looked at today for development like Dugald River, have actually been around a long time and the reason they haven't been developed before today is that either they have technical challenges or they have high costs, and that has issues I think for what the long-term sustainable price is going forward. 

ALAN KOHLER: And what about the demand outlook? Is there any push back from customers about the trebling of the cost of, for example, of galvanising iron? 

GREIG GAILEY, CEO, ZINIFEX: Well, in the issue...zinc's primary use is galvanising, rust protection, and in the terms of a sheet of galvanised steel it's a very minor cost component. So in terms of what drives the demand for galvanised steel it's really the price of iron ore not the price of zinc. I mean your options in galvanising is you move to something like aluminium which is not cheap either. You paint it, which has high costs in terms of maintenance or you simply let it rust. And in many cases - are you going to buy a car that's not galvanised? 

ALAN KOHLER: It's a relatively simple business in some ways I guess, I mean, you dig the stuff out, you sell it and it's driven by the price, so what sort of price do you think is implied - zinc price is implied by the current Zinifex share price and is it, is that kind of sustainable? 

GREIG GAILEY, CEO, ZINIFEX: Well, I think the issue you're asking is hard to answer because what price is required to justify the current share price depends on not one year but going out a whole series of years. It's what is the price in the next three years but also what is the long-term price. And I can't answer that question in terms of detail because it would require all sorts of different assumptions. But clearly the market determines what our stock price is and if you look at our other criteria like PE multiples, we actually trade at a PE multiple well below most of our peers. 

ALAN KOHLER: That's right, which is remarkable in a sense. Given the rise in Zinifex share price over the past couple of years which has been far greater than BHP Billiton's and Rio Tinto's yet your PE is much below their's, isn't it? 

GREIG GAILEY, CEO, ZINIFEX: I think you have to look at where we came from. There's no question that when Zinifex was created and put into the market, the ghost of Pasminco hung over the company, and certainly at the time of the float, it was the lack of support by Australian institutional investors which really led the offer to go into the market at such a low price and I believe we had a period to prove that we could run this company successfully, and I believe we've done that, and I think that's a component also in the uplift in the share price. 

ALAN KOHLER: Now Zinifex, I think, is virtually debt free, if not entirely. 

GREIG GAILEY, CEO, ZINIFEX: We are more than debt free, we have cash in the bank. 

ALAN KOHLER: Right, and what's your free cash flow generation at the moment? 

GREIG GAILEY, CEO, ZINIFEX: We don't put actual numbers in the market but our free cash flow at the moment is very healthy. We're generating a lot of cash. 

ALAN KOHLER: So what are you going to do with it all? 

GREIG GAILEY, CEO, ZINIFEX: Well, we've got a pretty clearly stated policy and that is if we can invest it to grow the business for the shareholders and to their benefit then we will do that. If we're unable to do that because we can't find the right opportunities we will simply give the money back to shareholders. 

ALAN KOHLER: At what point will you make that decision, that you need to give it back? 

GREIG GAILEY, CEO, ZINIFEX: That decision's made every half. We declared a dividend at the last half and I'm sure when the accounts close for the June period, the board will come to a view as to what the cash surplus position is, whether it has opportunities to use that cash and if it doesn't it will do as it has stated, it will return that cash to shareholders. 

ALAN KOHLER: Are there sufficient opportunities, do you think, in zinc? 

GREIG GAILEY, CEO, ZINIFEX: There are clearly opportunities to explore and we're busily doing that, we're investing $75 million over 5 years to explore in and around the properties we have and in joint ventures with others. But when it comes to acquisitions there's no doubt that the market for resource companies today is pretty well priced. 

ALAN KOHLER: $75 million's probably a few hours cash flow. 

GREIG GAILEY, CEO, ZINIFEX: Possibly, but $75 million is still a significant investment in exploration and exploration itself is an interative process in the sense that you spend some money, you learn a bit more and you spend a bit more, and there are clearly limits on how much one wants to spend very quickly. 

ALAN KOHLER: I suppose the question is whether you're considering diversifying outside of zinc? 

GREIG GAILEY, CEO, ZINIFEX: Again the strategy is clearly stated. We like the metals we're in. We also like other base metals which are related to our business. As well as zinc we produce lead, copper, silver, gold and in any of those materials we would feel very comfortable. 

ALAN KOHLER: Right. So each of those materials, because you're known, obviously, as a zinc company primarily, and the other metals you mentioned are minor. So can you see a time in the future when one or more of those metals equal zinc in terms of Zinifex's portfolio? 

GREIG GAILEY, CEO, ZINIFEX: I wouldn't like to look forward in that sense because I think what the future holds is not necessarily certain, but it's also worth mentioning that we are the world's third-largest silver refiner, so we're a big producer of final silver as well - doesn't contribute a huge amount to our profit, because we pay for what we bring in to Port Pirie, but we are a major player in the silver market.


----------



## michael_selway

ALAN KOHLER: Can you see possible takeovers as well as developing mines? 

GREIG GAILEY, CEO, ZINIFEX: Acquisitions are something that are clearly of interest to us, there's no doubt about that. If we could find an acquisition at the right price which added value we'd be very happy to do that. And I have no doubt that just as many merchant banks pass through my office proffering companies to me, they pass through other people's offices proffering my company to them.

ALAN KOHLER: Do you think we're in sort of a boom mentality at the moment? Do you think that there is sort of a euphoria spreading across the mining industry which is affecting everybody, the way they think about it? 

GREIG GAILEY, CEO, ZINIFEX: I think we're in a rather remarkable period. If you look at the history of the resource business, the last period that resembled this was the economic miracle that occurred after the war with Japan and there's no doubt in my mind that China is undergoing a massive economic change which is sort of a decade-long phenomenon. Now the Chinese may fall in potholes along the 10 years, but there is no doubt that they are on a trajectory for a long period of economic growth. 

ALAN KOHLER: And obviously that post-war miracle and period you spoke about led to the nickel boom of the late 60's and the 1970 crash. What sort of danger do you think there is of that happening again? 

GREIG GAILEY, CEO, ZINIFEX: I think the cycle here's longer. I think one of the more interesting things is what it means in terms of the long-term commodity prices. The industry is experiencing cost increases, which is the black side of the current resources boom, and the industry is looking, generally speaking, at developing more difficult deposits in less hospitable places, and I think all of that has ramifications for long-term sustainable prices. 

ALAN KOHLER: We'll have to leave it there but thanks very much, Greig Gailey. 

GREIG GAILEY, CEO, ZINIFEX: Alan, pleasure.

http://www.abc.net.au/insidebusiness/content/2006/s1621836.htm
http://www.abc.net.au/reslib/200604/r82495_239914.asx


----------



## Smurf1976

Halba said:
			
		

> it'll be interesting to see ZFX quarterly report this week..hopefully no big dramas...they really need to expand their production if they can



Zinifex Hobart Smelter appears (looking from the outside) to be roasting concentrates falt out again after having the larger of the two roasters shut for upgrading. The crane is still up though but it appears that the roasters are running. They've relined one of the roasters and also the associated waste heat boiler. This enables the roaster to run a bit faster. Since roasting was the bottleneck in the plant, this will increase overall production by a modest amount for zinc and by-products. 

With the move to use 70% Century concentrates in the Hobart Smelter, there will be increased sulphur content (so in theory at least more sulphuric acid produced and also more heat, hence the roaster reline) and a lower production of paragoethite (the primary waste product which is shipped to Port Pirie). The reduction in paragoethite production will mean they are able to reprocess more than is produced thus gradually clearing the stockpiles (at Port Pirie) of unprocessed material.

Just for general info on what the company is doing.


----------



## professor_frink

rederob said:
			
		

> qed



sorry mate you've lost me with that comment????????


----------



## rederob

professor_frink said:
			
		

> sorry mate you've lost me with that comment????????




qed

Latin abbreviation:
quod erat demonstrandum (which was to be demonstrated)

... usually after we have proved that the case exists....


----------



## professor_frink

rederob said:
			
		

> qed
> 
> Latin abbreviation:
> quod erat demonstrandum (which was to be demonstrated)
> 
> ... usually after we have proved that the case exists....




gotcha.
 Making fun of me and I didn't even know it!


----------



## YOUNG_TRADER

YOUNG_TRADER said:
			
		

> Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
> 
> 
> Here's my prefered stock exposure
> 
> *TZN* Terramin
> I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file
> 
> To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out





Started this thread on the 22nd March, TZN was 70c then, today only 1 month later it nearly tested $2,


Take a look at CBH Zinc Bulls! $1+ stock


----------



## nizar

YOUNG_TRADER said:
			
		

> Take a look at CBH Zinc Bulls! $1+ stock




Agree, this stock very undervalued
Market sentiment is still negative, but BFS for Sulfur Springs due soon and for sure this will boost the sp


----------



## YOUNG_TRADER

Re CBH see the thread,

Be nice to get some feedback,





*Zinc trades at all-time high on London Metal Exchange*
E-mail | Print |  | Disable live quotes Last Update: 7:03 AM ET Apr 26, 2006


SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants. 
Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals. 
Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories. 
Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions. 
Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005. 
First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades. 
Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust. 
The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007. 
"The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement. 
The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.


----------



## noirua

YOUNG_TRADER said:
			
		

> Re CBH see the thread,
> 
> Be nice to get some feedback,
> 
> 
> 
> 
> 
> *Zinc trades at all-time high on London Metal Exchange*
> E-mail | Print |  | Disable live quotes Last Update: 7:03 AM ET Apr 26, 2006
> 
> 
> SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants.
> Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals.
> Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories.
> Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions.
> Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005.
> First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades.
> Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust.
> The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007.
> "The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement.
> The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.





I wonder whether this boom in mining stocks and metals is nearing its peak? Maybe not yet, 'though in the end it will surely crash as it always has before, will it not??


----------



## nizar

Historically, All commodity bull runs have lasted btw 15 and 23 years

So yes, as before, it will become crashing down, but not for  a long time yet


----------



## YOUNG_TRADER

Resource boom behind zinc mine's reopening

Thursday, 27/04/2006

The booming base metals price has led to the reopening of an old zinc mine in the Kimberley region of Western Australia.

Canadian company Teck Cominco will reopen its underground mine near Fitzroy Crossing because of a recent hike in zinc prices on the London Metal Exchange.

Teck Cominco exploration general manager Wayne Spilsbury says zinc is performing well after a three-year price glut. 

*"We were watching the stocks of zinc in the LME warehouses and making sure those numbers were coming down before we made a decision to reopen. There is now an under supply, but that has only turned up in the last year or so."*

In South Australia, junior zinc explorer Terramin Australia has also benefited.

Terramin's shares have surged more than 44 cents to $1.84 after it discovered rich zinc deposits near Port Augusta.


----------



## nizar

UBS forecasts



> Cash zinc prices, up nearly 80% since the beginning of the year on the LME, are seen at *165.4c/lb, or $3,649/ton for 2006*, up 65% on the January forecast and at *185c/lb or $4,081/ton for 2007*, up 95% on the previous outlook.
> 
> "Improving fundamentals are no better reflected than in the highly visible inventory levels on the LME. Inventories of refined zinc in LME warehouses currently total 266,000 tons compared with 394,000 tons at the end of 2005," UBS said.
> 
> Around two-thirds of these stocks are held in LME warehouses in New Orleans, which were damaged in the wake of Hurricane Katrina, UBS added. The cash nickel forecast is up 15% at 761.2c/lb, or $16,794/ton for 2006 and up 40% for 2007 on the previous forecast at 765c/lb, or $16,878/ton.
> 
> Base metal forecasts LME cash, in cents a pound.
> 
> 2006 2007
> Copper 246.7 265.0
> Aluminum 126.2 127.5
> Nickel 761.2 765.0
> *Zinc 165.4 185.0*
> Lead 59.0 57.3


----------



## rederob

Nizar
UBS needs to work on its maths.
Copper is already 80cents higher than their 2006 forecast.
So we need copper to retrace a full dollar and remain at that level from tomorrow until the end of the year for UBS to be close to right.
Flying pigs have got more appeal.


----------



## RichKid

A view of some activity before the last price spike: http://www.marketthoughts.com/images/20051120/chart03.gif

And current prices: http://www.sucden.co.uk/sucden-bin/charts/chart.asp?com=zinc


----------



## YOUNG_TRADER

Zinc, Copper and Silver Market Fundamentals 



   Metal Price Performance in US Dollars (as at February 17, 2006)
---------------------------------------------------------------------
  Metal    Historic   Historic 25   Recent    Historic   Recent Price
            25 Year      Year        High       Price      Increase
              High       Bottom               Increase    from Cycle
           (pre this                          From Cycle    Bottom
             cycle)                            Bottoms
---------- ---------- ----------- ---------- ----------- ------------
Copper       $1.52      $0.62       $2.32       245%         375%
---------- ---------- ----------- ---------- ----------- ------------
Nickel       $8.42      $1.76       $8.05       478%         457%
---------- ---------- ----------- ---------- ----------- ------------
Aluminum     $1.08      $0.47       $1.18       230%         251%
---------- ---------- ----------- ---------- ----------- ------------
Lead         $0.48      $0.17       $0.64       282%         376%
---------- ---------- ----------- ---------- ----------- ------------
Zinc         $0.91      $0.34       $1.08       267%         317%
---------- ---------- ----------- ---------- ----------- ------------
    Source: Yukon Zinc Corporation


April 26, 2006 (Kitco): Zinc $1.53, Copper $3.13, Silver $12.72. 

Zinc consumers are reducing inventories because refined production cannot keep pace with consumption. Smelter and refinery capacity are approximately equal with demand, but a deficit is being created because mines are not supplying sufficient concentrate to the smelters, which is causing smelters to produce below capacity. The underlying problem is that zinc reserves are being depleted faster than new production is coming on line. To compound this situation, there is a lack of new discoveries, and very few projects that are expected to begin production. Sierra Mojada is among the few projects that could potentially come on line in the next few years 



*The following table indicates zinc projects that are currently in development, as well as mines that are expected to be restarted in the near future:* 

New Mines           Start        Zinc       Lead    Capex    Source
                   Production     tpa       tpa
----------------- ----------- ----------- -------- ------- -----------
Lanping, China    Late 2005??  140,000
----------------- ----------- ----------- -------- ------- -----------
Dairi, Indonesia     Late       90,000    50,000   US$118M Brook Hunt
                    2006/07                                  Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Jaguar, Australia Early 2007    25,000                     Brook Hunt
                                                             Nov 2005----------------- ----------- ----------- -------- ------- -----------
Duck Pond, NFLD    Late 2006    34,500                      Macquarie
 Canada
----------------- ----------- ----------- -------- ------- -----------
San Cristobal,    Early 2007?  182,500    85,000   US600M  Apex silver
 Bolivia
----------------- ----------- ----------- -------- ------- -----------
Duddar, Pakistan   Late 2007   100,000                      Macquarie
----------------- ----------- ----------- -------- ------- -----------
Cerro Lindo, Peru  Mid 2007    140,000    20,000           Brook Hunt
                                                             Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Perkoa, Burkina    Late 2007    60,000             $US72.5   Mining
 Faso                                                       News, Dec
                                                               2005----------------- ----------- ----------- -------- ------- -----------
Wolverine, Canada   Q3 2007     44,000     4,000
----------------- ----------- ----------- -------- ------- -----------
Aljustrel,           2007?      78,000    18,000           Brook Hunt
 Portugal                                                    Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Subtotal 2006 and              754,000    177,000
 2007
----------------- ----------- ----------- -------- ------- -----------
Development
 Projects
----------------- ----------- ----------- -------- ------- -----------
Mehdiabad, Iran      2010      450,000    110,000          Brook Hunt
                                                             Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Penasequito,       Mid 2008     75,000    40,000           Brook Hunt
 Mexico                                                      Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Khandiza,            2008?      45,000    17,000           Brook Hunt
 Uzbekistan                                                  Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Expansions,
 Restarts,
 Reductions
----------------- ----------- ----------- -------- ------- -----------
Endeavor,            Mine       85,000?   52,000?          Brook Hunt
 Australia          failure                                  Nov 2005
CBH Resources      Oct 2005
                      and
                    restart----------------- ----------- ----------- -------- ------- -----------
Balmat, USA        Mid 2006   35 mths to            $20M   Brook Hunt
                               ramp up to                    Nov 2005
                                 54,000
----------------- ----------- ----------- -------- ------- -----------
Lennard Shelf,     18 mths     180,000                     TeckCominco
 Australia           after                                   Jan 2006
                    restart
                    decision
----------------- ----------- ----------- -------- ------- -----------
Sa Dena Hess,      9 to 24      40,000                     TeckCominco
 Canada            mths after                                Jan 2006
                   a decision
----------------- ----------- ----------- -------- ------- -----------
Antamina, Peru                Est.120,000                  TeckCominco
                                   vs                        Jan 2006
                              184,000 in
                                  2005
----------------- ----------- ----------- -------- ------- -----------
Langlois, Canada   Mid 2007     54,000                     Brook Hunt
                                                             Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Black Mountain-      2005      Increase
 Deeps expansion,                from
 Namibia                       28,200 to
                                 45,000
----------------- ----------- ----------- -------- ------- -----------
    Source: Yukon Zinc Corporation


These additions are expected to be partially or totally offset by mine closures due to reserve depletion. 

Andrew Roebuck of TeckCominco has forecasted that mine closures will remove 1.4 million tonnes of zinc production by 2011. The Lennard Shelf deposit in Australia, with historic annual production of 180,000 tonnes of zinc, is expected to be restarted, but at this production rate, it is expected to have only 18 months of reserves left. 

As indicated in the above table, the estimated amount of possible new production and expansions, ignoring the possible closure of the 160,000 tonne McArthur River mine in Australia's Northern Territory, is projected to be about 1.3 million tonnes, which is about the amount needed to replace the projected closures. 

The supply deficit is currently at least 450,000 tonnes per annum and new consumption grew last year by more than 600,000 tonnes. The deficit will be with us for the foreseeable future, until new zinc deposits are discovered or existing zinc production is expanded. In some cases, new or expanded production would likely not be justified for low grade deposits until the price of zinc increases further. 

The price for zinc has improved dramatically from its low of $0.335 per pound on November 7, 2001 to $1.53 per pound on April 26, 2006. The inventory of zinc traded on the LME has fluctuated from a low of 240,000 tonnes in May 2001 to a high of 790,000 tonnes in April of 2004, with a subsequent decline to the present 260,000 tonnes. 

The copper and silver supply demand fundamentals are very similar to the above documentation for zinc. Demand exceeds supply and mine production is in deficit to both demand and metal production, hence the depletion of inventories of all three metals. All three metals have a deficit between consumption and mine production and a lack of new discovery sufficient to satisfy projected increase in consumption. Zinc, copper and silver prices are expected to continue to increase and remain strong due to increasing demand and inadequate supply. This situation will likely persist until sufficient new production can be discovered, developed and put into production to balance the markets of each of the metals. The process to develop a new mine, from discovery through production, generally takes 10 to 15 years. Metalline has been exploring and developing Sierra Mojada for 10 years. 

Metals rank in the order of tonnes consumed: iron, aluminum, copper and zinc. Silver ranks among the most important of the precious metals and has a strong, increasing, industrial demand. 

*Zinc, copper and silver are among the most important metals to the world's industrial economy * JML or CBH anyone?


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Zinc, Copper and Silver Market Fundamentals
> 
> Metals rank in the order of tonnes consumed: iron, aluminum, copper and zinc. Silver ranks among the most important of the precious metals and has a strong, increasing, industrial demand.
> 
> *Zinc, copper and silver are among the most important metals to the world's industrial economy * JML or CBH anyone?




When does JMl start producton again and how much? when will it be in full production and how much?

CBH is good although not in full production to September 06?

thx

MS



> *Zinc - Outlook for 2006*
> 
> 8.                  *Global usage of refined zinc metal* is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
> 
> 9.                  It is anticipated that *global zinc mine output* will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
> 
> 10.             A further 4.3% increase in *world refined zinc metal production* to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
> 
> 11.             *Chinese net imports of zinc metal* are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
> 
> 12.             Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. *Current forecasts indicate a shortfall of 437,000 tonnes*.




http://www.ilzsg.org/archives.asp?go=getarchive&num=132


----------



## nizar

zinc seems to be stuck in the 1.45-1.55 range for the last 2 weeks or so...

when is it going to start moving again?


----------



## michael_selway

nizar said:
			
		

> zinc seems to be stuck in the 1.45-1.55 range for the last 2 weeks or so...
> 
> when is it going to start moving again?




Nizar you have to look at "Live Warrants" thats why. "Cancelled" means its already been sold.

http://www.lme.co.uk/dataprices_daily_metal.asp

basically LME Zinc supplies have been increasing in recent weeks ive noticed its 172450 tonnes atm

thx

MS


----------



## RichKid

michael_selway said:
			
		

> Nizar you have to look at "Live Warrants" thats why. "Cancelled" means its already been sold.
> 
> http://www.lme.co.uk/dataprices_daily_metal.asp
> 
> basically LME Zinc supplies have been increasing in recent weeks ive noticed its 172450 tonnes atm
> 
> thx
> 
> MS




More Zinc prices and inventory levels here, plus other metals, Zn seems to be ranging below about 1.50/lb atm: http://www.kitcometals.com/


----------



## michael_selway

RichKid said:
			
		

> More Zinc prices and inventory levels here, plus other metals, Zn seems to be ranging below about 1.50/lb atm: http://www.kitcometals.com/




Hi thx yeah i knwo about the kitco site

London Metal Exchange Warehouse Stocks(May 02) 
Metal Tonnes in Storage Change from previous day 
Aluminum  740,225 -1400  
Copper  117,550 -175  
Nickel  26,928 -66  
Lead  99,600 -200  
*Zinc  258,650 -2050* 

That 258650 can be quite misleading because 86200 is already 'sold" ("cancelled"). So you should also follow the change in "live warrants" daily which may give a better picture

http://www.lme.co.uk/dataprices_daily_metal.asp

thx

MS


----------



## michael_selway

http://www.lme.co.uk/dataprices_daily_metal.asp

03/05/06 = 173425 tonnes
02/05/06 = 172450 tonnes

Hi rederob, do u know where the  increase in Zinc Live Warrant is coming from? is it new orleans for the above?

thx

MS


----------



## rederob

MS
2,125 re-warranted at New Orleans.
A total 70,475t of LME-registered metal at this US port were damaged by the hurricanes that ravaged the city last year. All of it was cancelled, the LME saying it needed to be cleaned before re-warranting. Deliveries into warehouse here so far this year have totalled 45,300t, suggesting this process will continue for a while yet.


----------



## nizar

nice to see zinc continue its uptrend... was in 1.45-1.50 for the last few weeks

now 1.53, up 3%.... lets see if it stays that way when NY opens..


----------



## YOUNG_TRADER

Almost @ $4,000t = $1.80


----------



## michael_selway

yogi-in-oz said:
			
		

> Hi folks,
> 
> As requested Michael, we started on a long analysis
> on zinc prices, but not having any recent historical
> data, it proved too complex .....
> 
> ..... suffice to say, we expect more of the same from
> zinc prices, until about the  December 2007 solstice
> 18-24122007.
> 
> -----
> 
> For most traders, it is more PRACTICAL to analyze the
> individual zinc stocks. While the zinc price may be
> the fundamental driver for the industry as a whole,
> not all those stocks will participate at the same time,
> due to a wide variation in their own natural cycles.
> 
> -----
> 
> In fact, we can line up all the zinc stocks mentioned in
> this thread, around the 360 degree dial and come up
> with a likely sequence, WHEN they will react to the
> same cycle one-by-one, as each aspect progresses,
> around the dial.
> 
> For example, right now, we can see that JML should be
> triggered on 12-13072006, with ZFX a few days later,
> on 17072006 .....
> 
> Then, for the same cycle, the order goes AIM, INL, KZL,
> TZN, CBH and UCL, all on different dates .....
> 
> -----
> 
> ..... and on ZFX ..... so, you think it's high now???
> 
> Come back in December 2006 for another look,
> but more importantly will be the run up into
> December 2007 ..... should be HUGE !~!
> 
> If we get time on this end, this could be a good
> project ..... "tag-the-zinc-stock" ..... lol
> 
> have a great weekend all
> 
> yogi




Hi when u say "*December 2007 solstice 18-24122007*" do u mean?

- Huge crash of ZFX
- Huge crash for zinc stocks
- Huge crash for All Ords
- Huge crash for all world markets esp DOW?

Can you pleasee see if the "stars' have changed since?

thx

MS


----------



## specman

When are we going to see zinc get to critical mass?LME supplies are drying up and mining supply won't catch up with demand till at least 2008.

Would anyone care to speculate on what will happen to the price of zinc when LME supplies approach zero?

Unlike copper,zinc cannot be substituted with a cheaper alternative and users will pay any price because it comprises only a small percentage of the finished product.


----------



## nizar

specman said:
			
		

> Unlike copper,zinc cannot be substituted with a cheaper alternative and users will pay any price because it comprises only a small percentage of the finished product.




Agree

in november supplies were 450ktonnes
now they are at 250ktonnes

so ~200k per 6 months is the usage rate

in around 6 months, LME supplies very close to zero and remember may be much sooner if more cyclones hit the actual storage warehouses which are in New Orleans

I still think by the end of the year zinc spot price will be >$2
We are nowhere near the peak...


----------



## michael_selway

nizar said:
			
		

> Agree
> 
> in november supplies were 450ktonnes
> now they are at 250ktonnes
> 
> so ~200k per 6 months is the usage rate
> 
> in around 6 months, LME supplies very close to zero and remember may be much sooner if more cyclones hit the actual storage warehouses which are in New Orleans
> 
> I still think by the end of the year zinc spot price will be >$2
> We are nowhere near the peak...




yeah no where near peak imo, but also important to note that as zinc prises move higher demand may slow, so LME Supplies may drop slower. Also Live Warrants (as cancelled warrants implies sold already) still stands at 172k atm and for a while now, so it may hit a snag there?

http://www.lme.co.uk/dataprices_daily_metal.asp

Btw for Copper...



> After ending 2005 with an essentially balanced market (small deficit of 64,000 t), the copper market is expected to show a modest surplus in 2006 of about 240,000 t. According to ICSG estimates, a growth in usage will result in a production surplus in 2007 of only about 55,000 t.




http://www.icsg.org/News/Press_Release/PressReleaseStatsApr06.pdf



> Zinc - Outlook for 2006
> 
> 8.                  Global usage of refined zinc metal is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
> 
> 9.                  It is anticipated that global zinc mine output will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
> 
> 10.             A further 4.3% increase in world refined zinc metal production to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
> 
> 11.             Chinese net imports of zinc metal are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
> 
> 12.             Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. *Current forecasts indicate a shortfall of 437,000 tonnes*




http://www.ilzsg.org/archives.asp?go=getarchive&num=132
http://www.insg.org/insg.htm




Another interesting thing, during the last basemetal correction, zinc went down from 1.08 to 0.89 so

(0.89/1.08)*1.71 = 1.40 = New level of support?

If it is, it appears that its the same sellers selling? So the majority of fundies are still holding?

thx

MS


----------



## specman

Would the New Orleans damaged zinc being gradually cleaned and put back onto live warrants explain why it has remained static at 172k?

When that is depleted I would expect supplies on the live warrants to decline as well or is that flawed logic?


----------



## michael_selway

specman said:
			
		

> Would the New Orleans damaged zinc being gradually cleaned and put back onto live warrants explain why it has remained static at 172k?
> 
> When that is depleted I would expect supplies on the live warrants to decline as well or is that flawed logic?




Thats what i would presume as well, but cant be for certain. However i remember "rederob' saying that there was about 40k to be added back to "live warrants" after being cleaned

But on a day to day basis, u cant really say unless u have access like rederob to the official LME site, which gives u breakdowns of the "ins", "outs", "cancelled" and from which location. He might be able to give us an update   

thx

MS


----------



## YOUNG_TRADER

Zinc Warehouse Stocks 19 May 2006 
 Close In Out +/- On Warrant Cancelled 
Antwerp 0 0 0 0 0 0 
Avonmouth 0 0 0 0 0 0 
Baltimore 275 0 50 -50 0 275 
Barcelona 175 0 0 0 175 0 
Bilbao 600 0 0 0 600 0 
Bremen 0 0 0 0 0 0 
Chicago 0 0 0 0 0 0 
Detroit 550 0 25 -25 0 550 
Dubai 50 0 0 0 0 50 
Genoa 3750 0 25 -25 1575 2175 
Gothenburg 0 0 0 0 0 0 
Hamburg 0 0 0 0 0 0 
Helsingborg 0 0 0 0 0 0 
Hull 0 0 0 0 0 0 
Johor 16675 0 0 0 16550 125 
Leghorn 15425 0 175 -175 14375 1050 
Liverpool 1675 0 50 -50 1000 675 
Long Beach 0 0 0 0 0 0 
Los Angeles 0 0 0 0 0 0 
Newcastle 0 0 0 0 0 0 
New Orleans 175600 100 925 -825 113425 62175 
Rotterdam 75 0 25 -25 0 75 
Singapore 13050 0 200 -200 12175 875 
St Louis 0 0 0 0 0 0 
Sunderland 7200 0 50 -50 7125 75 
Trieste 9125 0 75 -75 3225 5900 
Vlissingen 2725 0 0 0 2600 125 

Total 246950 100 1600 -1500 172825 74125


----------



## YOUNG_TRADER

Info got all skewed


Look at it in attached word doc,


----------



## yogi-in-oz

michael_selway said:
			
		

> Hi when u say "*December 2007 solstice 18-24122007*" do u mean?
> 
> - Huge crash of ZFX
> - Huge crash for zinc stocks
> - Huge crash for All Ords
> - Huge crash for all world markets esp DOW?
> 
> Can you pleasee see if the "stars' have changed since?
> 
> thx
> 
> MS






Hi Michael,

Nothing changes about the planetary cycles, except
our interpretation, sometimes ..... 

As for ZFX ..... simply, the expected strong rally going
into the December 2007 solstice, should come to an end
and we'll probably see trading go flat, then pullback.

Every year, there's a few positive ZFX annual cycles,
around 14-15 April, 17-18 August and 16-17 December.

..... for 2006 only however, we'll probably see ZFX go flat-
to-down,  from around 16122006 - 08012007 ..... that same 
negative cycle for ZFX should also repeat, around mid-July 2007.

happy days

  yogi


----------



## michael_selway

yogi-in-oz said:
			
		

> Hi Michael,
> 
> Nothing changes about the planetary cycles, except
> our interpretation, sometimes .....
> 
> As for ZFX ..... simply, the expected strong rally going
> into the December 2007 solstice, should come to an end
> and we'll probably see trading go flat, then pullback.
> 
> Every year, there's a few positive ZFX annual cycles,
> around 14-15 April, 17-18 August and 16-17 December.
> 
> ..... for 2006 only however, we'll probably see ZFX go flat-
> to-down,  from around 16122006 - 08012007 ..... that same
> negative cycle for ZFX should also repeat, around mid-July 2007.
> 
> happy days
> 
> yogi




Thx Yogi and YT

Btw found it

http://www.basemetals.com/stocks.aspx (click on magnifying glass)

Now we can track daily movements/breakdown in LME Live Warrants!












LME Stocks go "out" from Cancelled Warrants. LME Stocks go "in" to Live Warrants. Live Warrants when "sold" become Cancelled Warrants.

yeah it appears New Orleans 850 tonnes were added to Live Warrants on 22/05/06

thx

MS


----------



## nizar

thanks MS

much easier to keep track of zinc supplies now

all the best


----------



## nizar

> Crude-oil futures rallied to their highest level in a week, with a forecast of an active 2006 hurricane season acting as a tailwind. Crude for July delivery was last up $1.09 at $71.05 a barrel. See Futures Movers.




If New Orleans gets hit again, imagine what that would do to the price of zinc?

Zinc should even go up upon speculation of this... most of the supplies are concentrated there....

http://www.marketwatch.com/News/Sto...377-4EA5-AD7E-40A45E662053}&siteid=mktw&dist=


----------



## YOUNG_TRADER

nizar said:
			
		

> If New Orleans gets hit again, imagine what that would do to the price of zinc?
> 
> Zinc should even go up upon speculation of this... most of the supplies are concentrated there....
> 
> http://www.marketwatch.com/News/Sto...377-4EA5-AD7E-40A45E662053}&siteid=mktw&dist=





Exactly and huh guess what, hurricane season should impact around Sept/Oct!

Look out those who don't hold Zincies!


----------



## YOUNG_TRADER

Zinc stock levels are starting to fall rapidly,


Stocks down to 242k with 'on Warrant' Stocks down to 168k, dropping by 1kt a day so fundamentals still remain very very strong!


----------



## rederob

YOUNG_TRADER said:
			
		

> Zinc stock levels are starting to fall rapidly,
> 
> 
> Stocks down to 242k with 'on Warrant' Stocks down to 168k, dropping by 1kt a day so fundamentals still remain very very strong!



YT
Don't get overexcited.
Zinc drawdown rates have actually been reducing at most locations except New Orleans over recent weeks.
Although the picture for zinc is not poor, the recent fundamentals for copper and nickel suggest these metals in the near term will find strong, favourable action.


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Zinc stock levels are starting to fall rapidly,
> 
> 
> Stocks down to 242k with 'on Warrant' Stocks down to 168k, dropping by 1kt a day so fundamentals still remain very very strong!




yeah was wondering why price increased so much. Zinc live warrants below 170k!






Besides 'new orleans" looks like quite a few were bought from "leghorm"

thx

MS


----------



## YOUNG_TRADER

rederob said:
			
		

> YT
> Don't get overexcited.
> Zinc drawdown rates have actually been reducing at most locations except New Orleans over recent weeks.
> Although the picture for zinc is not poor, the recent fundamentals for copper and nickel suggest these metals in the near term will find strong, favourable action.





Zinc Stocks have fallen to their lowest level in 5 years!

Take a look @ the graphs, 

The 1yr graph is almost a straight liner decline after stock increase in June 2005,


----------



## rederob

YOUNG_TRADER said:
			
		

> Zinc Stocks have fallen to their lowest level in 5 years!
> 
> Take a look @ the graphs,
> 
> The 1yr graph is almost a straight liner decline after stock increase in June 2005,



YT
The charts are heartening.
My point is only that most out-side activity is presently at New Orleans whereas we were getting draws across the globe in recent months. It's not a negative thing, just not a *strong* positive.
A few months ago the ratio of cancelled to total LME zinc inventory was over 40%, while today it's only 30%.
The reduced rate of decline is simply an indication of weakening trend, rather than of weakness per se.
As I have posted elsewhere on nickel, that is a metal which is experiencing a sharp fall in stock levels *and * an increasing cancellation ratio: For those that trade, the traffic signals for nickel are now "green" while for zinc the green light globe needs replacement.


----------



## Kipp

rederob said:
			
		

> YT
> 
> As I have posted elsewhere on nickel, that is a metal which is experiencing a sharp fall in stock levels *and * an increasing cancellation ratio: For those that trade, the traffic signals for nickel are now "green" while for zinc the green light globe needs replacement.




Rob, do you find it strange that the Ni producers don't seem to bounce around as much on Nickel spot price as Zinc.  I don't follow them all, but if you compare ZFX to Zinc price the too roll hand in hand whereas the movements for SMY do not seem as pronounced(though they are 90% unhedged) do you think maybe the Ni market is skeptical of the $10+/lb mark always suspects a recoil to $8-9 once speculation dries up?  

Just a thought.


----------



## rederob

Kipp said:
			
		

> Rob, do you find it strange that the Ni producers don't seem to bounce around as much on Nickel spot price as Zinc.  I don't follow them all, but if you compare ZFX to Zinc price the too roll hand in hand whereas the movements for SMY do not seem as pronounced(though they are 90% unhedged) do you think maybe the Ni market is skeptical of the $10+/lb mark always suspects a recoil to $8-9 once speculation dries up?
> 
> Just a thought.



I do find it strange, but nickel is fickle!
Notice that nickel inventories move up and down comparatively more rapidly than zinc, so perhaps players are a lot more wary of nickel's downside (than are keen to punt on upside).

I just look for long term value and good entry prices: Right now I think SMY is an excellent proposition, not just for their nickel but also their copper/cobalt byproduct credits.


----------



## michael_selway

rederob said:
			
		

> YT
> The charts are heartening.
> My point is only that most out-side activity is presently at New Orleans whereas we were getting draws across the globe in recent months. It's not a negative thing, just not a *strong* positive.
> A few months ago the ratio of cancelled to total LME zinc inventory was over 40%, while today it's only 30%.
> The reduced rate of decline is simply an indication of weakening trend, rather than of weakness per se.
> As I have posted elsewhere on nickel, that is a metal which is experiencing a sharp fall in stock levels *and * an increasing cancellation ratio: For those that trade, the traffic signals for nickel are now "green" while for zinc the green light globe needs replacement.




yeah i guess the main danger is "in" which gets added to live warrants, if that increases rapidly, its a signal that the outside supply is larger than demand

thx

ms


----------



## YOUNG_TRADER

Zinc stock levels continue to fall!


Total stocks down to 229,250 t's they were 242,025 2 Weeks ago
Thats a 5% decline in 2 weeks

On warrant stocks are @ 158,275 t's they were @ 168,775 2 weeks ago
Thats a 6% decline in 2 weeks

Supply/Demand fundamentals are still dangerously tight, once volatility settles I expect Zinc to charge towards $5000 t 

Be prepared!


----------



## nizar

YOUNG_TRADER said:
			
		

> Zinc stock levels continue to fall!
> 
> 
> Total stocks down to 229,250 t's they were 242,025 2 Weeks ago
> Thats a 5% decline in 2 weeks
> 
> On warrant stocks are @ 158,275 t's they were @ 168,775 2 weeks ago
> Thats a 6% decline in 2 weeks
> 
> Supply/Demand fundamentals are still dangerously tight, once volatility settles I expect Zinc to charge towards $5000 t
> 
> Be prepared!




yeh i agree 5000 tonne/soon

but in the short term; the market focus is on inflation leading to higher interest rates; and slowing economic growth in the US (which is still the largest economy in the world dont forget)

so its either time ur entry/top up well, or be prepared to wait a few months

by end of the year, zinc supplies will be very close to full depletion and spot prices will spike - so make sure ur holding zinc stocks when that happens!


----------



## red

interesting article on zinc

www.financialsense.com/editorials/sjuggerud/2006/0531.html


----------



## Sean K

Tom obviously owns TEK. Great ramp!


----------



## michael_selway

nizar said:
			
		

> yeh i agree 5000 tonne/soon
> 
> but in the short term; the market focus is on inflation leading to higher interest rates; and slowing economic growth in the US (which is still the largest economy in the world dont forget)
> 
> so its either time ur entry/top up well, or be prepared to wait a few months
> 
> by end of the year, zinc supplies will be very close to full depletion and spot prices will spike - so make sure ur holding zinc stocks when that happens!




Rederob, ZInc Live Warrants went up alot (from singapore), do you knwo why?






thx

MS


----------



## nizar

was gonna ask the same thing..... 8000 in.... 

coz if zinc loses its fundamental support (of supply shortage) then its back to the long term average for zinc... oh no..


----------



## rederob

michael_selway said:
			
		

> Rederob, ZInc Live Warrants went up alot (from singapore), do you knwo why?



From Andy Home's team:
*"The warranting of 10,400t of zinc at LME warehouses in Singapore was the first major inflow into the system since early-April, when 10,300t were warranted at Livorno in Italy.
It’s unclear whether this metal””Western brand from what we hear””has been displaced by recent higher Chinese exports, which moved up a gear in April to 19,000t from an average of 10,200t per month in Q1 2006. However, its arrival seems to have been talked about in some parts of the market and as such was not a complete surprise.
Monday was the first daily net rise in the LME headline figure since late April.."*


----------



## specman

Could it be that China is selling some of their old reserves to take advantage of the high prices and in doing so,cause prices to drop so they can buy back cheaper?

I understood they were selling their copper reserves recently.


----------



## michael_selway

nizar said:
			
		

> was gonna ask the same thing..... 8000 in....
> 
> coz if zinc loses its fundamental support (of supply shortage) then its back to the long term average for zinc... oh no..




1025 went in yesterday, from Singapore again







maybe just once or two offs as Rederob's quote appears to say

Btw here are the likely ZINC supply coming on in the next few yrs













> The above chart demonstrates that during the period of low zinc prices, from about 2000 to 2004, few mines have been profitable and that it requires zinc prices above $0.60 for mines to be profitable. The Century Mine in Australia, one of the largest and highest grade zinc mines has cash costs of $0.37 per pound. With overhead added to cash costs to determine total costs even Century had marginal profitability until the recent rise in zinc price.




http://www.metalin.com/zincsilvercopper.html


----------



## YOUNG_TRADER

Total stock down under 230k t, with on warrant stocks down to 160kt

Can't wait for September!

Zinc's to your starting line, on your marks, get set...............


----------



## YOUNG_TRADER

Another day another good decline of zinc,

Total stocks down to 226k t on warrant @ 159k t


----------



## Kipp

YOUNG_TRADER said:
			
		

> Another day another good decline of zinc,
> 
> Total stocks down to 226k t on warrant @ 159k t



Yeah... the PRICE is declining just as fast...
I don't know much about Zinc supply and demand.. but doesn't it concern you that although the supply deficit is approx 700,000 tonnes p.a. a 7% drop in demand is all it would take for supply = demand.  (total consumption is about 10 million tonnes).

And if demand fell 10%...  
But hey, this could be a naive opinion, cause I don't know how easily achieved that is- (i.e. availabilty of Zinc substitutes etc)


----------



## cuttlefish

A question I have is how good an indicator are the LME stocks for supply vs demand - is all world zinc traded through the LME warehouses? Or does some zinc trade occur directly between producer and consumer (particularly for large consumers).  Also just because its gone from the LME official warehouses doesn't mean it isn't still sitting in someones warehouse somewhere else does it?


----------



## michael_selway

cuttlefish said:
			
		

> A question I have is how good an indicator are the LME stocks for supply vs demand - is all world zinc traded through the LME warehouses? Or does some zinc trade occur directly between producer and consumer (particularly for large consumers).  Also just because its gone from the LME official warehouses doesn't mean it isn't still sitting in someones warehouse somewhere else does it?




LME is a base for leftover world supplies basemetals you could say

E.g. ZFX produces zinc everyday, they get shipped to whoever needs them most (across the globe) and left overs are offered to LME, and usually they buy to store for the future. Those who need zinc but who are not offered can buy them from LME if there are supplies left. Although LME is a world base, it physically has warehouses in different cities in the world. LME is just a total count for them all. LME is also a benchmark price for producers to sell at. Something like that i think.

Cuttlefish, in specualtion pepel buy it but dont use it, just hoping to sell at a higher price, but i dont think they have that much.

Kipp u need to keep an eye on "On Warrant" which is about 160k atm, Only when "On Warrant" go down does Zinc price go up. This applies for all basemetals actually






Btw its not 700k deficit, only 400k deficit



> Zinc - Outlook for 2006
> 
> 8.                  Global usage of refined zinc metal is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
> 
> 9.                  It is anticipated that global zinc mine output will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
> 
> 10.             A further 4.3% increase in world refined zinc metal production to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
> 
> 11.             Chinese net imports of zinc metal are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
> 
> 12.             Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. Current forecasts indicate a shortfall of 437,000 tonnes.




http://www.ilzsg.org/ilzsgframe.htm


----------



## rederob

cuttlefish said:
			
		

> A question I have is how good an indicator are the LME stocks for supply vs demand - is all world zinc traded through the LME warehouses? Or does some zinc trade occur directly between producer and consumer (particularly for large consumers).  Also just because its gone from the LME official warehouses doesn't mean it isn't still sitting in someones warehouse somewhere else does it?



It's a good question.
Producers do not deliver to warehouses as a general matter of choice - they deliver to customers/consumers.
Excess metal is delivered to exchange warehouses and when markets are in oversupply the metal price is in contango, reflecting a premium for storage costs.
When the inventory trend shows sustained withdrawals leading to appreciable drawdowns, and the markets confirm demand is likely to tighten, you should see this reflected in LME stock levels.
That said, there is a lot more to it as you must bear in mind that warehouses are located globally, and stock might exist in quantities out of kilter with where demand is strong.  This is especially the case presently with most copper stock in Asia, and with strong demand in both Europe and the US.


----------



## cuttlefish

Thanks for the answers michael and rob - thats explained it well.


----------



## Kipp

Thanks MS- the figure of 700K deficit was from memory in this thread... guess I was wrong...

Do you have any theory on why Zn and Cu prices are linked?  It doesn't make sense to me as I thought they were used in different alloys... and funamentally Zn is much stronger than Copper.


----------



## nizar

Kipp said:
			
		

> Thanks MS- the figure of 700K deficit was from memory in this thread... guess I was wrong...
> 
> Do you have any theory on why Zn and Cu prices are linked?  It doesn't make sense to me as I thought they were used in different alloys... and funamentally Zn is much stronger than Copper.




copper - plumbing, piping, electrical wiring

zinc - anti-corrosive, galvanising

they are linked partly i think because people are pouring money into commodity funds that invest in metals; they buy a bit of zinc, copper, gold, etc


----------



## michael_selway

nizar said:
			
		

> copper - plumbing, piping, electrical wiring
> 
> zinc - anti-corrosive, galvanising
> 
> they are linked partly i think because people are pouring money into commodity funds that invest in metals; they buy a bit of zinc, copper, gold, etc




http://metalsplace.com/metalsnews/?a=5749



> Australia's ABARE: Zinc prices may keep rising next year
> Source: Dow Jones
> 
> Zinc CatalogZinc prices are expected to surge 17% in 2007, adding to a forecast more than doubling this year as growth in global mine output continues to fail to match demand, Australia's government commodities forecaster said Monday.
> 
> Zinc is forecast to average US$3,500 a metric ton in 2007, up from US$3,000 in 2006 and US$1,382 a ton last year, the Australian Bureau of Agricultural and Resource Economics, or ABARE, said in its June quarter report. Spot zinc closed at US$2,940 a ton in London Friday.
> 
> "The rise in prices so far this year reflects a market characterized by slow growth in zinc mine supply, concerns over supply disruptions, strong global demand for zinc and low and steadily declining zinc stocks," ABARE said.
> 
> "Compounding these effects has been an increase in targeting of base metals such as zinc by investment funds and financial speculators," ABARE said.
> 
> A strengthening of world economic growth is expected to drive demand for galvanized steel, zinc's main use, in the construction and automotive industries in 2006 and 2007, ABARE said.
> 
> World production is expected to grow to 10.7 million metric tons this year, up from 10.3 million tons in 2005. A further rise in output to 11.2 million tons is forecast for 2007.
> 
> The gains aren't expected to be enough to cope with demand though, ABARE said.
> 
> World consumption is expected to rise to 11.1 million tons in 2006 and again to 11.4 million tons next year.




Contrast above with below

http://www.smh.com.au/news/BUSINESS/Big-falls-in-major-minerals-Access/2006/05/01/1146335639645.html

thx

MS


----------



## rederob

Below is taken directly from ABARE.
ABARE has never been particularly bullish on metals and traditionally underestimate prices by a large margin.
*zinc prices to rise in 2006*
In the fi rst fi ve months of 2006, world zinc prices averaged US$2660 a tonne (US121c/lb). Zinc prices are forecast to average about US$3200 a tonne (US145c/lb) in the September quarter and around US$3000 a tonne (US136c/lb) for the year as a whole ”” the highest annual zinc price in real terms (2005-06 dollars) since 1974 when prices averaged over US$5000 a tonne (US227c/lb).
Growth in world mine output has been unable to keep pace with consumption owing to a lack of investment in new mine capacity over the past ten years. With consumption exceeding production in the fi rst half of the year, zinc stocks have fallen. Since the end of December 2005, stocks held by the London Metal Exchange have declined by over a third to 240 000 tonnes at the end of May.
Total reported stocks ”” which are stocks held by the London Metal Exchange, the private sector and governments ”” at the end of 2005 were the equivalent of 5.9 weeks of consumption. With consumption expected to exceed production in 2006, total reported stocks are forecast to decline to 2.9 weeks of consumption by year’s end.
In 2007, consumption is again forecast to exceed production, leading to a forecast rundown in stocks to 1.9 weeks of consumption. As a result, world zinc prices are forecast to rise by a further 17 per cent to average around US$3500 a tonne (US159c/lb) for the year.


----------



## michael_selway

rederob said:
			
		

> Below is taken directly from ABARE.
> ABARE has never been particularly bullish on metals and traditionally underestimate prices by a large margin.
> *zinc prices to rise in 2006*
> In the fi rst fi ve months of 2006, world zinc prices averaged US$2660 a tonne (US121c/lb). Zinc prices are forecast to average about US$3200 a tonne (US145c/lb) in the September quarter and around US$3000 a tonne (US136c/lb) for the year as a whole ”” the highest annual zinc price in real terms (2005-06 dollars) since 1974 when prices averaged over US$5000 a tonne (US227c/lb).
> Growth in world mine output has been unable to keep pace with consumption owing to a lack of investment in new mine capacity over the past ten years. With consumption exceeding production in the fi rst half of the year, zinc stocks have fallen. Since the end of December 2005, stocks held by the London Metal Exchange have declined by over a third to 240 000 tonnes at the end of May.
> Total reported stocks ”” which are stocks held by the London Metal Exchange, the private sector and governments ”” at the end of 2005 were the equivalent of 5.9 weeks of consumption. With consumption expected to exceed production in 2006, total reported stocks are forecast to decline to 2.9 weeks of consumption by year’s end.
> In 2007, consumption is again forecast to exceed production, leading to a forecast rundown in stocks to 1.9 weeks of consumption. As a result, world zinc prices are forecast to rise by a further 17 per cent to average around US$3500 a tonne (US159c/lb) for the year.




Hm contrast that with



> Copper above historical price levels until end-07 -SocGen
> Source: Dow Jones
> 
> Copper CatalogCopper prices will remain far above historical norms until late during 2007, outperforming other base metals on the basis of strong supply and demand fundamentals, Societe Generale said Monday.
> 
> Market tightness is sufficient to reignite the bull market in the third quarter, making copper the London Metal Exchange metal most likely to reach new highs, the bank said in a report. LME three-month copper hit a record high of $8,825/ton in May.
> 
> Copper is forecast to show a deficit of 100,000 metric tons in 2006 and a balanced market during 2007.
> 
> During 2006, LME cash prices will average $7,250/ton and $6,300/ton.
> 
> However, copper prices will also be particularly sensitive if and when investor sentiment turns, SocGen added.
> 
> Following flat global demand growth in 2005 due to large scale destocking, copper substitution will confine world demand growth to 4.5% during 2006.
> 
> On the supply side, mine capacity utilization no longer looks likely to improve this year, although refined output should rise by over 5%, SocGen said.
> 
> "Mines could perform better in 2007 but refined growth will slow," the report said.
> 
> The zinc market is seen in a 350,000-ton deficit during 2006, contracting to a 150,000-ton deficit in 2007.
> 
> LME cash prices are forecast at $3,175/ton for 2006 and $2,350/ton next year.
> 
> *"In the case of zinc at least, therefore, we doubt the boom-bust pattern is a thing of the past and prices should eventually fall sharply. However, this is not yet on the market's radar screen and growing tightness suggests that zinc should return to outperforming for the next few months," SocGen said.*
> 
> Aluminium on the other hand will continue to underperform given its weaker fundamentals and is likely to average $2,740/ton during 2006 basis LME cash and $2,350/ton in 2007.




http://metalsplace.com/metalsnews/?a=5773

thx

MS


----------



## YOUNG_TRADER

Spots above $1.50 a lb even with copper falling 3% last night, de-railing? Would need to see more evidence of this but it looks like mkt is starting to appreciate Zinc fundamentals,

More and more focus of near linear drawdowns, more and more specualtion of Zinc running out of stock, I doubt that, but inventory levels will get dangerously low IMO,



Nice article on ZFX, also mentions JV's with 2 of my fav's TZN (enjoyed my run) BSM (Yet to run)




Zinc bull takes future by the horns
Robert Gottliebsen, Vision 2000 
July 08, 2006
ZINIFEX believes the next three years will be good for zinc and that the stock market is under-pricing its future prospects.
Chief executive Greig Gailey says analysts have not factored in his long-term plans to ensure the company will still be prospering in 15 years. So when you ask him whether he would recommend a bid at a 30 per cent premium to the market, he comes back quickly: "We would probably hold out for 60 per cent." 

But Gailey is a realist and knows the resource industry is undergoing dramatic consolidation and Zinifex has an open register, making it vulnerable. But the zinc boom has given him strong cash flow, which means that Zinifex could itself do a share-exchange deal with a company that had major developments requiring finance. 

Gailey has had an incredible roller-coaster ride since leaving BP and becoming chief executive of Zinifex's predecessor, Pasminco, in August 2001. He had barely put his feet under the desk when the operation was put into administration. 

But Gailey stayed with the enterprise and worked with the administrator, finally helping to engineer the float. In the year to June 30, he will be rewarded because analysts expect Zinifex to earn $950 million - paradoxically, the exact sum the banks received in the public float which crystallised their $2 billion loss. 

Zinifex's 2005-06 earnings received a big boost from zinc prices in the second half so analysts are looking for a profit in the vicinity of $1.5 billion, or around $2.70 per share, in 2006-07. That puts the company on a projected price/earnings ratio of between three and four. 

It is at this low level because around 80 per cent of the Zinifex profit comes from the Century zinc mine, which is a discrete ore body that will produce at full capacity (500,000 tonnes) until 2016 when production will suddenly come to an end. Until 2011, the company will need to spend around $100 million annually on overburden removal. In the final five years, cash generation will skyrocket, depending on the zinc price. 

Gailey is a zinc price bull for at least the next three or four years. He points out that during the decade to 2000, many big new zinc mines, including Century, were commissioned, flooding the market and causing the price to slump to uneconomic levels. Exploration was halted and new projects mothballed. Then demand from China took out the surplus production, and there are no new major, committed projects, so the price has risen to above $US3300 a tonne - a more than fourfold increase from the level of the tough years. 

After 2011, whether the price holds that level, goes higher or slips back will depend on demand at that time and whether the major miners ramp up major new mines. But Gailey points out that because no major company has committed to a significant new mine, it will be four or five years before one is started. 

There are very few major ore bodies awaiting development because exploration was stopped. The biggest undeveloped ore body is in Iran and, not surprisingly, the political risks are deterring capital investment. Others are in frozen areas of North America that will be very costly to develop. The majors are hesitating because capital costs have ballooned and they need a sustained zinc price that is substantially above previous levels to justify investment. 

The memory of the slump of 2000 is still fresh. The market is pricing Zinifex shares on the basis that by 2016 it will have only token zinc production and will be left with four smelters. 

Gailey has a four-point plan to prove the market wrong. The first step is to develop the Dugald River mine near Cloncurry. Dugald River was sold to Zinifex (then Pasminco) by Rio Tinto as part of the Century zinc sale. It is high-grade zinc ore which contains manganese which previously made it very unattractive to smelters. But modern Chinese smelters can treat zinc concentrates containing manganese. 

The company is conducting a pre-feasibility study and, if this proves successful in 2007, there will be a full feasibility study leading to a mine that will produce around 200,000 tonnes of zinc a year (two-fifths of Century). 

Zinifex has no net debt and will be able to fund the $500 million Dugald project from cash flow. 

Gailey's second plan is to accelerate exploration around Century. When Rio Tinto explored the area, it was looking for copper and Gailey is optimistic that he can find at least one ore body that will enable zinc production from the company's Century facilities to continue after 2016. 

*Zinifex exploration outside these two projects is designed to take a majority stake in highly prospective areas found by junior miners. In South Australia, it is funding an $8 million exploration program to earn a 70 per cent stake in the highly prospective Minninnie zinc deposit owned by Terramin. If the exploration produces disappointing results, Zinifex will walk away. It has done a similar deal with the Base Metals group in Tasmania. * 

Zinifex also believes the company should do joint deals with junior explorers in North and South America where there are highly prospective zinc prospects. 

In all, it plans to spend $90 million over the next three years on exploration. 

Greg Gailey's policy of not attempting to peg out leases in areas outside of the mining sites but to allow junior explorers to do the early work is a radical departure from conventional exploration thinking. 

The third plan is to further develop the company's second mine at Rosebery, Tasmania, which has been producing for around 70 years. The company is to spend $19 million to determine exactly how much ore is in the mine and, once again, the company is confident Rosebery will still be producing well after 2016. 

Modern, conventional miners rarely have a substantial investment in smelting. Indeed, one of the reasons why companies are reluctant to bid for Zinifex is its ownership of four smelters. Potential bidders fear that if any of these smelters need to shut, the company will be hit with an enormous clean-up bill. 

Gailey disputes this, pointing out that the cost of closing the smelter at Cockle Creek was less that $50 million. The company has no plans to shut any of its smelters, but, theoretically, if it shut its Dutch smelter, the value of the real estate would yield a profit on the closure. The Dutch smelter is very profitable and expanding because it is efficient and Europe is now short of smelter capacity. 

The company receives periodic bad publicity from the historic problems at Port Pirie. Gailey says the company is moving to overcome the Port Pirie problems created by Zinifex's heritage. Longer term, he believes the Port Pirie complex will help the company make an important thrust into zinc recycling. 

Gailey can see smelting as an important source of future profits for Zinifex but does not plan to open new smelters because that would involve investing in new projects in Third World countries. Any surplus cash will be returned to shareholders. 

If Gailey is wrong (and the market is right), then by 2010 Zinifex will only have six years to run at Century, although it should be starting to ramp up Dugald. 

But Gailey's vision is that the company will have by then found two ore bodies the size of Rosebery so that it can maintain production beyond the Century closure. 

Most resource giants have projects coming forward and are not faced with the stark reality of mine closures as a result of a failure to explore. But the zinc boom has given Gailey and his people the cash to reverse their history and create their own future. 

Gailey might, of course, recommend a bid a little lower than a 60 per cent premium on the market. But it won't be much lower because he is supremely confident Zinifex can be a major zinc producer well beyond 2016. 

He believes demand for zinc will continue to rise because of the development of China and the high cost of alternative products like aluminium and stainless steel.


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Spots above $1.50 a lb even with copper falling 3% last night, de-railing? Would need to see more evidence of this but it looks like mkt is starting to appreciate Zinc fundamentals,
> 
> More and more focus of near linear drawdowns, more and more specualtion of Zinc running out of stock, I doubt that, but inventory levels will get dangerously low IMO,
> 
> 
> 
> Nice article on ZFX, also mentions JV's with 2 of my fav's TZN (enjoyed my run) BSM (Yet to run)
> 
> 
> 
> 
> Zinc bull takes future by the horns
> Robert Gottliebsen, Vision 2000
> July 08, 2006
> ZINIFEX believes the next three years will be good for zinc and that the stock market is under-pricing its future prospects.
> Chief executive Greig Gailey says analysts have not factored in his long-term plans to ensure the company will still be prospering in 15 years. So when you ask him whether he would recommend a bid at a 30 per cent premium to the market, he comes back quickly: "We would probably hold out for 60 per cent."




Hi Thanks

http://www.theaustralian.news.com.au/story/0,20867,19716193-5001942,00.html

Heres the Full Transcript



> Zinifex: More Than a Miner
> By Robert Gottliebsen
> Watch the Greg Gailey interview
> Hear the Greg Gailey interview
> 
> PORTFOLIO POINT: Zinifex’s smelting operations and active exploration program underline its determination to extend its resource base.
> 
> Background, by Eureka Report editor James Kirby. Greg Gailey, chief executive of Zinifex, may be sitting on Australia's cheapest mining stock (see Mike Mangan's story today), but the group's heavy exposure to a single commodity ”” zinc ”” and more specifically, a single mine ””Century mine ”” has kept institutional shareholders away from the stock.
> 
> However, as Gailey makes clear to Robert Gottliebsen* in today's video interview, Zinifex has been making every effort to ensure that once the Century mine runs out in 2016, his company will be well placed to extend its operations through new mining projects already under development.
> 
> Zinifex is a two-year-old company but it carries the baggage of one of the mining industry's biggest recent failures. The company was reborn from the ashes of Pasminco, which went under after a hedging program went spectacularly awry in the mid-1990s.
> 
> Rising costs across its mining operations mean Zinifex is now heavily dependent on strong industrial demand to drive zinc prices higher in the near future. As Gailey stresses throughout the interview, Zinifex is more than just a mining company: it also has extensive and profitable smelting operations.
> 
> 
> The interview
> 
> Robert Gottliebsen: What’s your view on the outlook for the zinc price over the next three or four years?
> 
> Greg Gailey: We’re very bullish about the zinc market and the reason we’re very bullish is we see China demand as continuing for a prolonged period; that is, what’s happening in China today is not just a couple of years; this is a decade-long phenomenon. Second, we see constrained supply. It takes some four to five years to bring a major project to market ”” a new mine and those projects are simply not in the pipeline, so we think an ongoing shortage of supply is with us for at least a couple of years and possibly beyond that.
> 
> But there’s a big deposit in Iran which could change the outlook at little.
> 
> I don’t know that it’ll change things. That deposit is certainly earmarked for development by a company called Union Resources in cooperation with the Iranians, but Iran’s a very difficult political environment and I think companies are going to require relatively high rates of return to operate in those countries.
> 
> Around 80% of the Zinifex profit comes from the Century mine. What are you doing to maintain it and how long will it last?
> 
> Century is due … the current ore body will expire in 2016. It’s a well-defined discrete ore body. We hold some 2000 square kilometres of exploration leases around Century and we’re very active in exploring in that area, looking for another deposit that we will be able to exploit through the infrastructure that exists there. We’re also actively exploring in Tasmania; and we’re in partnership with Terramin in South Australia; and we’re actively looking for other joint venture opportunities to explore. So we believe that we will be successful in discovering additional orebodies and the company will renew its resource base.
> 
> What are you doing at Century to maintain production to 2016?
> 
> Century was constructed to operate at 500,000 tons a year and it will do that right through till the last day, effectively, and we therefore have no issues in terms of the production out of Century over the life of the mine. Costs are certainly a key problem for the industry at this point in time. Costs are escalating. Operating costs are up. Capital costs are up and we’re doing everything we can to contain that. We have a project called Project Productivity, which was designed to take 450 positions out of the company over two years. We’re 12 months into that. We’ve taken more than 200 out in that period so we’re doing everything we can to contain costs, but quite frankly they’re escalating at a more rapid rate than we can contain them.
> 
> Are you accelerating the removal of overburden?
> 
> We are at Century. We are bringing forward overburden removal over the next three years and that will mean that costs in the last few years of that mine’s life will decline and the cash flow therefore coming out of Century increases actually as the mine nears the end of its life.
> 
> Zinifex has four smelters. Do you see that as a long-term business for the company?
> 
> Smelting’s actually a good business and, interestingly enough, despite the fact that the treatment charge the smelter gets ”” which is what the mine pays the smelter to convert the concentrate to metal ”” are actually at record lows, smelting profitability is actually at record highs. And the reason for that is one of the idiosyncrasies in the zinc market: that smelters only pay for about 90% of the metal they receive so they actually recover about 10% more than they pay for. With current metal prices, that incremental metal is very valuable and hence smelters are actually making record profits. We see smelting as an ongoing part of the company and one that will make a contribution to its profitability.
> 
> Does the clean-up factor and the pollution worry you in the smelting business?
> 
> No. We have a very clear policy that we want to be good corporate citizens and we want to be welcomed in the areas we operate. We are addressing legacy issues and we acknowledge we inherited some when we acquired the assets from Pasminco. We’re actively addressing those. We have a plan to spend, for instance, $56 million in the next three years in South Australia addressing some of the lead issues in Port Pirie, and we believe that the clean up ultimately is manageable, when and if it occurs, when a site is closed. But we have no intention to close any of our smelters.
> 
> Greg if you’re right about the zinc price, the market is taking a very conservative view about the prospects of the company.
> 
> One of the issues we have with the market is the market doesn’t give us any value for the ultimate renewal of the assets we have, and in a resource business if you can’t renew the assets then clearly you disappear. We have a very active exploration program. We think we have some exceptional prospects in highly prospective areas such as around Century in Queensland and, quite frankly, the market is giving us no credit for us being successful in that regard.
> 
> What are you going to do with your cash?
> 
> Again, we’ve got a very clear policy on that, which we’ve stated and we’ve lived by ””that is, that if we cannot use that cash internally to shareholders’ benefit then it will be given back to shareholders, and in our short life of two years we’ve had two dividends and a share buyback.
> 
> If I made you a takeover offer of, say 30% on the current market price, would you take it?
> 
> No it wouldn’t be enough.
> 
> How much do you want?
> 
> As much as I could get.
> 
> Seriously, do you see a likelihood of more global mergers in the mining business?
> 
> think it’s inevitable, for two reasons. One there is clearly advantages to the industry in having fewer larger players, and when I say advantages, the key advantage to me is you get a more sensible scheduling of increments and expansion. One of the industry’s biggest problems is too much additional capacity comes in in too short a time frame and the price drops. So you get a more sensible structuring of project development. The other reason is that it’s the nature of the beast; that is, if you look at most of the large mining companies that exist today they’re products of amalgamations and that amalgamation will go on. The other interesting thing about the industry is that as the food chain … people move up the food chain … a whole lot of new people come in at the bottom and there’s never a shortage of new companies coming into mining. So new companies coming in all the time and amalgamations occurring and bigger companies emerging.
> 
> And, of course, you’re using those new companies as part of your exploration?
> 
> Absolutely.
> 
> * Robert Gottliebsen is a national business commentator for The Australian.




Video:

http://www.eurekareport.com.au/iis/iis.nsf/pages/3D16FA4D99411755CA2571A30081CF87/$file/060630%20Greg%20Gailey.wmv


----------



## YOUNG_TRADER

C'mon 200k level break break break!!!!!!!!!

LME Warehouse Stocks 11 Jul 2006 
          Close   In   Out     +/-  On Warrant  Cancelled 


Zinc    205825 525 1950 -1425 155600       50225


----------



## YOUNG_TRADER

YOUNG_TRADER said:
			
		

> Zinc stock levels continue to fall!
> 
> 
> Total stocks down to 229,250 t's they were 242,025 2 Weeks ago
> Thats a 5% decline in 2 weeks
> 
> On warrant stocks are @ 158,275 t's they were @ 168,775 2 weeks ago
> Thats a 6% decline in 2 weeks
> 
> Supply/Demand fundamentals are still dangerously tight, once volatility settles I expect Zinc to charge towards $5000 t
> 
> Be prepared!




Well that was mid june, roughly 1 month ago Zinc stocks 230k t's today 205k t's a decline of 11% or so in 4 weeks 

On warrant were 158k t's today 155.6k t's a decline of 1.5% in 4 weeks (hmmm not as big!)


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Well that was mid june, roughly 1 month ago Zinc stocks 230k t's today 205k t's a decline of 11% or so in 4 weeks
> 
> On warrant were 158k t's today 155.6k t's a decline of 1.5% in 4 weeks (hmmm not as big!)




yeah might hit a snag at 155k abouts






thx

MS


----------



## rederob

MS and YT
You are not looking at the picture from the best angle.
It is true that the rate of decline of total LME inventory is decreasing, but it is still *decreasing*. 
The causes are several fold. Most important is the re-warranting of "cleaned" stock back into New Orleans.  That is, damaged stock from Katrina is being made good for sale, so we have had a lot of metal coming and going from New Orleans and muddying the gross data.  My estimate is that we are very close to the end of this re-warranting cycle and the LME zinc data hereonin is likely to be much more reliable.
Note that New Orleans accounts for over 70% of LME's warehouse zinc stock and over 80% of cancelled warrants (ie the zinc ready to leave the warehouse).
Buying of base metals this time of year is always cyclically weak - don't lose sight of this very, very important fundamental driver of price.
The good news is that inventory drawdowns are relatively well balanced across the globe at present, so while New Orleans is the key to market direction, we need to open our eyes to wider market action as it occurs.

*Lowest low of inventory in past 5 years: 16 May 2005 - LME nickel ends the day at $7.33lb. LME nickel inventories slipped to stand at 4,926 tons. *


----------



## YOUNG_TRADER

LME Warehouse Stocks 11 Jul 2006 
           Close   In   Out     +/-   On Warrant Cancelled 

Zinc    203575   0 2250  -2250        150650      52925 


Hmmmmm On warrant dropped by 5k t's overnight!


Also Red I am super bullish on Zinc, I was just commenting on how total stockpiles had decreased significantly while On-Warrants hadn't as much,


Monday should see Zinc below 200kt's!


----------



## YOUNG_TRADER

So Close to that 200k t level   


LME Warehouse Stocks 13 Jul 2006 
            Close In Out      +/-  On Warrant    Cancelled 

Zinc    201825 0 1750   -1750       149150        52675


----------



## YOUNG_TRADER

This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,



LME Warehouse Stocks 17 Jul 2006 
               Close           In   Out  +/-        On Warrant      Cancelled 
Zinc   * 202700* 3550 1425 2125       *145075 *      57625


----------



## michael_selway

YOUNG_TRADER said:
			
		

> This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,
> 
> 
> 
> LME Warehouse Stocks 17 Jul 2006
> Close           In   Out  +/-        On Warrant      Cancelled
> Zinc   * 202700* 3550 1425 2125       *145075 *      57625










Yeah On Warrant went down which is a good thing!

But "In" went up which is a bad thing, but maybe the 3550 "In" was Cancelled straight away? Compare 17/07/06 and 14/07/06?


----------



## rederob

Lads
Keeping zink in the pink with the missing link:


----------



## michael_selway

rederob said:
			
		

> Lads
> Keeping zink in the pink with the missing link:




hehe thx red

Btw where did you get that info below that shows cancelled today seperate from total cancelled

thx

MS


----------



## YOUNG_TRADER

rederob said:
			
		

> Lads
> Keeping zink in the pink with the missing link:





Truely poetic, I am to think, the way you rhymed zink, link and pink, twas a marvel I am to say, tis a pity it shall still be a nervous day


----------



## rederob

michael_selway said:
			
		

> hehe thx red
> Btw where did you get that info below that shows cancelled today seperate from total cancelled
> thx
> MS



That would be telling!
My tables are better than the ones I use to get the info from, so a "variety of sources" is the correct answer.
Tracking the fundamentals is plain hard work!


----------



## Kipp

YOUNG_TRADER said:
			
		

> LME Warehouse Stocks 11 Jul 2006
> Close   In   Out     +/-   On Warrant Cancelled
> 
> Zinc    203575   0 2250  -2250        150650      52925
> 
> 
> Hmmmmm On warrant dropped by 5k t's overnight!
> 
> 
> Also Red I am super bullish on Zinc, I was just commenting on how total stockpiles had decreased significantly while On-Warrants hadn't as much,
> 
> 
> Monday should see Zinc below 200kt's!





So... by you maths if there's 145K "on warrant" and LME drops ~2000 tonnes/day.  Then theres ~75 trading days (i.e. weekdays till 0?) so 15 weeks... mid October?


----------



## michael_selway

Kipp said:
			
		

> So... by you maths if there's 145K "on warrant" and LME drops ~2000 tonnes/day.  Then theres ~75 trading days (i.e. weekdays till 0?) so 15 weeks... mid October?




2000 tonnes/day is quite optimistic one woudl think

1000+ tonnes/day more conservative

Also higher prices may slow cancellation rate naturally

thx

MS


----------



## rederob

Kipp said:
			
		

> So... by you maths if there's 145K "on warrant" and LME drops ~2000 tonnes/day.  Then theres ~75 trading days (i.e. weekdays till 0?) so 15 weeks... mid October?



Kipp
The metal cupboard is seldom emptied: Higher backwardations as exchange warehouse stocks decline means opportunists "find" spare metal anywhere and everywhere.
So the last 20,000 tonnes of metal is hard to lower, quickly, as there is a nice premium selling into spot.
I concede that by October we are likely to see zinc tighter than copper is currently, and likely to do what copper did earlier this year: It's all good!


----------



## Kipp

rederob said:
			
		

> Kipp
> The metal cupboard is seldom emptied: Higher backwardations as exchange warehouse stocks decline means opportunists "find" spare metal anywhere and everywhere.
> So the last 20,000 tonnes of metal is hard to lower, quickly, as there is a nice premium selling into spot.
> I concede that by October we are likely to see zinc tighter than copper is currently, and likely to do what copper did earlier this year: It's all good!



I guess I can wait 3 months...


----------



## nizar

rederob said:
			
		

> I concede that by October we are likely to see zinc tighter than copper is currently, and likely to do what copper did earlier this year: It's all good!




Agree 

And then next year it will do what nickel is doing right now

And with respect to wats happening with nickel right now, theres about 180million dollars worth of nickel left according to LME data, so if u buy the lot, could u effectively make a squillion by slowly selling into the spike?

Of course, buying 100million dollars or so worth of nickel-mining stocks would also help your cause...

Surely this would be a good idea for someone cashed up like Jim Rogers for example ?


----------



## michael_selway

nizar said:
			
		

> Agree
> 
> And then next year it will do what nickel is doing right now
> 
> And with respect to wats happening with nickel right now, theres about 180million dollars worth of nickel left according to LME data, so if u buy the lot, could u effectively make a squillion by slowly selling into the spike?
> 
> Of course, buying 100million dollars or so worth of nickel-mining stocks would also help your cause...
> 
> Surely this would be a good idea for someone cashed up like Jim Rogers for example ?




hehe could be, btu 1 thing u have to remember, as you buy up fast, price will be higher and higher, so in reality u cant buy all of it at 180mil in one go

Consider shares and market depth, the sell orders get higher and higher

thx

MS


----------



## dubiousinfo

Zinc shortfall was 120 000 t in first 5 months
--------------------------------------------------------------------------------

Zinc supply fell short of demand for the first five months of the year, because of higher consumption of the metal used to galvanize steel, the International Lead and Zinc Study Group said.

Zinc production was 120 000 tons less than demand, compared with a shortfall of 98,000 tons a year earlier, the Lisbon-based group said in a report on its Web site today. The group is funded by the governments of producing and consuming countries.

Demand rose 2,4% to 4,47-million t, the group said. Production grew 1,9% to 4,35-million t.

Lead production outpaced consumption in the first five months by 76 000 t, the group said. Demand rose 6,2% to 3,29-million t and supply jumped 10% to 3,36-million tons.


----------



## YOUNG_TRADER

YOUNG_TRADER said:
			
		

> So Close to that 200k t level
> 
> 
> LME Warehouse Stocks 13 Jul 2006
> Close In Out      +/-  On Warrant    Cancelled
> 
> Zinc    201825 0 1750   -1750       149150        52675






Well we are below 200kt's Hooray!!!!!!!!   

LME Warehouse Stocks 21 Jul 2006 
 Close In Out +/- On Warrant Cancelled 
Copper    96325 2225 425 1800 89025 7300 
Aluminium    732875 0 3350 -3350 662750 70125 
Nickel    5718 42 426 -384 1788 3930 
*Zinc    196650 0 2050 -2050 142525 54125 * 

Zinc demand/supply deficit is no boubt supporting its $1.35-$1.50 price level, as declines continue in stock levels I'd expect Zinc to start firming up to around the $1.60-$1.70 level,


As stated previously I wasn't that bullish on copper and its supply surplus is now dragging the price down, however if a LT price of $3 lb prevails it will be amazing profits for the Copper boys!


----------



## rederob

YOUNG_TRADER said:
			
		

> As stated previously I wasn't that bullish on copper and its supply surplus is now dragging the price down, however if a LT price of $3 lb prevails it will be amazing profits for the Copper boys!



What supply surplus YT?
There is no copper at LME warehouses in Europe, very little in the US, and even Shanghai had a declining inventory last week.
There is half the amount of copper at warehouses as there is zinc, and daily copper use is significantly greater than zinc's.
Zinc is yet to hit "tight supply", but copper has been there for 2 years to date.
I like zinc's fundamentals but copper and nickel can go ballistic quickly: Zinc is just a comparatively "safe" play for now.


----------



## michael_selway

rederob said:
			
		

> What supply surplus YT?
> There is no copper at LME warehouses in Europe, very little in the US, and even Shanghai had a declining inventory last week.
> There is half the amount of copper at warehouses as there is zinc, and daily copper use is significantly greater than zinc's.
> Zinc is yet to hit "tight supply", but copper has been there for 2 years to date.
> I like zinc's fundamentals but copper and nickel can go ballistic quickly: Zinc is just a comparatively "safe" play for now.




Is Copper& Nickel really that bullish?

nothing in warehouses doesnt mean anything, its the "ins" vs "cancelling" thats is a better picture of underlying demand/supply

thx

MS


----------



## rederob

michael_selway said:
			
		

> nothing in warehouses doesnt mean anything, its the "ins" vs "cancelling" thats is a better picture of underlying demand/supply
> thx
> MS



That's a bit silly.
If there is nothing coming in, and nothing going out, because there just is nothing available, then what better picture do you want?
Get with the program lad!


----------



## michael_selway

rederob said:
			
		

> That's a bit silly.
> If there is nothing coming in, and nothing going out, because there just is nothing available, then what better picture do you want?
> Get with the program lad!




LME is just a base for leftovers (basemetals)

Most of the actual buying and selling is outside LME

Its possible that there is virtually nothing in LME, but the outside market is in perfect balance, so prices wont skyrocket

Also alot of "Ins" are more dangeours than low "cancellations", cause cancellations may be "fake" buying (eg by hedge/pension funds), but there cant be fake selling into LME right?

thx

MS


----------



## rederob

> LME is just a base for leftovers (basemetals)



If that were so then no metal would be drawn into LME warehouses when demand was tight.
In reality the opposite occurs.
High backwardation is in fact a safety valve for exchange warehouses, immediately drawing in metal because more is paid in the spot market than in the futures market.



> Most of the actual buying and selling is outside LME



Quite true, and justly so.
Consumers must lock in supply from producers, typically via long term contracts, in order to maintain steady production of their business lines.



> Its possible that there is virtually nothing in LME, but the outside market is in perfect balance, so prices wont skyrocket



Have never seen any example of this in the years I have been following base metals. LME and other exchange warehouses carry inventory in many cases simply because producers no longer feel they need to.  For example, "just in time" production sees the carrying risk borne by warehouses rather than themselves: There is a significant cost to carrying inventory, and carrying "excess" inventory is nowadays folly.



> Also alot of "Ins" are more dangeours than low "cancellations", cause cancellations may be "fake" buying (eg by hedge/pension funds), but there cant be fake selling into LME right?



The issue of "faking" is not one I have paid much attention to because the players in these markets stump up with plenty of money to establish a position, and the regulators would be on dishonest practices in a flash.  Note that this is different to simply writing futures that could catch the writer short (a la Lui Qibing and the SRB fiasco).


----------



## rederob

Zinc stocks are plummeting this week and cancelled warrants have increased markedly.
Given we are in the lull of the northern metals market, present action suggests that the last quarter's action will be hectic and prices rocket.
I am now tipping zinc to comfortably finish this year within cooee of $5000 per tonne.


----------



## YOUNG_TRADER

rederob said:
			
		

> Zinc stocks are plummeting this week and cancelled warrants have increased markedly.
> Given we are in the lull of the northern metals market, present action suggests that the last quarter's action will be hectic and prices rocket.
> I am now tipping zinc to comfortably finish this year within cooee of $5000 per tonne.





MMMMMMMM, CBH, PEM, ZFX, KZL   

mmmmmmmm, TZN, JML, AIM, UCL


----------



## michael_selway

YOUNG_TRADER said:
			
		

> MMMMMMMM, CBH, PEM, ZFX, KZL
> 
> mmmmmmmm, TZN, JML, AIM, UCL




hehe, not necessarily in that order   

thx

MS


----------



## michael_selway

michael_selway said:
			
		

> Is Copper& Nickel really that bullish?
> 
> thx
> 
> MS




http://www.smh.com.au/news/Business...e-to-end-report/2006/07/26/1153816215447.html



> *Access is tipping nickel prices to fall about 45 per cent between now and 2008, with slightly smaller falls for copper, cobalt, alumina, zinc and tin.
> 
> "Prices of base metals (excluding zinc), alumina, cobalt, oil and coking coal are expected to fall from their June quarter peaks over the forecast period.
> 
> "Prices are expected to fall by more than 15 per cent in each case, while copper prices are expected to fall by more than 40 per cent."
> 
> *




thx

MS


----------



## brerwallabi

michael_selway said:
			
		

> http://www.smh.com.au/news/Business...e-to-end-report/2006/07/26/1153816215447.html
> 
> thx
> 
> MS



Yawn
Yes whatever you want to be believe.


----------



## brerwallabi

I will still be in the Bahamas,Trinidad and Jamica next year thanks to zinc watching the cricket.


----------



## nizar

Does any1 agree with me that it seems that the rate of decline of LME zinc stocks is increasing?


----------



## michael_selway

nizar said:
			
		

> Does any1 agree with me that it seems that the rate of decline of LME zinc stocks is increasing?




Are u talking about "On Warrant" only?

thx

MS


----------



## YOUNG_TRADER

Strange Zinc is down almost 3% while all other base metals are up     

There may have been a very large add-in, we won't know until tomorrow, unless someone has live info and can shed light on stock levels?


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Strange Zinc is down almost 3% while all other base metals are up
> 
> There may have been a very large add-in, we won't know until tomorrow, unless someone has live info and can shed light on stock levels?




rederob should the live LME supply info, can you let us know?

thx

MS


----------



## YOUNG_TRADER

For some reason LME Stock levels weren't available at Kitco today,


RedRob a little help please


----------



## YOUNG_TRADER

YOUNG_TRADER said:
			
		

> For some reason LME Stock levels weren't available at Kitco today,
> 
> 
> RedRob a little help please





And again today, no info on stock levels, Redrob or MS you got any info on Zinc activity?

Thanks


----------



## michael_selway

YOUNG_TRADER said:
			
		

> And again today, no info on stock levels, Redrob or MS you got any info on Zinc activity?
> 
> Thanks









yeah no idea why http://www.basemetals.com/stocks.aspx is blank

thx

MS


----------



## michael_selway

YOUNG_TRADER said:
			
		

> And again today, no info on stock levels, Redrob or MS you got any info on Zinc activity?
> 
> Thanks




Alot of in today and -ve cancelled!






26.6%. It’s still a high level but not quite as dramatic as we have got used to in registered zinc stocks. 

thx

MS


----------



## nizar

i wasnt happy seeing the total stocks go up by 10,200tonnes but yeh doesnt matter spot price didnt seem to react to drastically..

hurricane season is here....


----------



## rederob

nizar said:
			
		

> i wasnt happy seeing the total stocks go up by 10,200tonnes but yeh doesnt matter spot price didnt seem to react to drastically..
> 
> hurricane season is here....



nizar
In june last year there was a massive inflow of zinc (+110k tonne from memory) and it too had a minimal impact on the price or trend at the time.
14 months later stock levels are some 450,000 tonnes lower, and markedly lower than any time in the last 5 years.
And the difference 5 years ago was that zinc demand was poor, and stock builds grew substantially.
I expect that within the fortnight yesterday's delivery will be but an oblivious pimple on the face of zinc's glorious profile.


----------



## michael_selway

rederob said:
			
		

> nizar
> In june last year there was a massive inflow of zinc (+110k tonne from memory) and it too had a minimal impact on the price or trend at the time.
> 14 months later stock levels are some 450,000 tonnes lower, and markedly lower than any time in the last 5 years.
> And the difference 5 years ago was that zinc demand was poor, and stock builds grew substantially.
> I expect that within the fortnight yesterday's delivery will be but an oblivious pimple on the face of zinc's glorious profile.




yeah every now and then there appears "ins" from no where






thx

MS


----------



## Kipp

Mike... it's 1:30 am... get some sleep.  Metal prices aren't gonna move all weekend so relax... (unless of course you live on the Wes Coast, in which case it's 11:30.. still too late to be thinking about Zinc on Friday!


			
				michael_selway said:
			
		

> yeah every now and then there appears "ins" from no where
> 
> 
> 
> 
> 
> 
> thx
> 
> MS


----------



## Kipp

Here's an odd thought... Mines operate 7 days a week (well, maybe not BMO but most do...) yet the metal markets are only open Mon-Fri.  So does that mean Friday's spot prices are the accepted price for the weekend (and therefore carry more significance than Mon-Thurs clsoing prices)?  Or have I missed something here???


----------



## rederob

Kipp said:
			
		

> Here's an odd thought... Mines operate 7 days a week (well, maybe not BMO but most do...) yet the metal markets are only open Mon-Fri.  So does that mean Friday's spot prices are the accepted price for the weekend (and therefore carry more significance than Mon-Thurs clsoing prices)?  Or have I missed something here???



Kipp
Not quite sure of your point, but will try a reply.
Metals producers have 3 major options/choices to sell their metal.
Most will deliver into long term "offtake" contracts.  Often these contracts will use LME benchmarked average prices, but not always.
Secondly, some metal may be delivered into "hedge" contracts.  That is, the company has entered the market to forward sell an agreed quantity of metal at a set price.  In the present bull market most of these hedge contracts have a negative mark to market value - that is, they involve selling metal at a lesser price than the prevailing price.
Unhedged producers that sell some or all (tho can't believe anyone would be selling *all*)  their metal into the spot market have the advantage of being exposed to rising prices.  Their disadvantage would be when the market turned sour and their profits reduced commensurately.
Producers will opten mix and match some of these options in order to "balance" their market risk.  For example, recently a gold miner (Croesus) has been unable to satisfy its hedge commitments and is presently under administration because it does not have the finances to buy its way out of its bind. Croesus had the double problem of poor forward prices in a rising market, and inability to meet contracted quantities for delivery.
This may not answer your question, Kipp, so you might want to use the above info to rephrase it.


----------



## Sean K

1001  [Dow Jones] Oxiana (OXR.AU), Kagara (KZL.AU) likely to outperform fellow miners, broader market after LME copper, zinc prices rallied 2-3% overnight on supportive supply side newsflow, weaker USD; with metal traders, analysts waiting for confirmation of upside breakout, suggesting further gains. Zinc pure-play Zinifex (ZFX.AU), gold miners Newcrest (NCM.AU), Lihir (LHG.AU) also set to gain on higher overnight metal prices. (JAD)


----------



## Kipp

rederob said:
			
		

> Kipp
> Not quite sure of your point, but will try a reply.
> Metals producers have 3 major options/choices to sell their metal.
> Most will deliver into long term "offtake" contracts.  Often these contracts will use LME benchmarked average prices, but not always.
> Secondly, some metal may be delivered into "hedge" contracts.  That is, the company has entered the market to forward sell an agreed quantity of metal at a set price.  In the present bull market most of these hedge contracts have a negative mark to market value - that is, they involve selling metal at a lesser price than the prevailing price.
> Unhedged producers that sell some or all (tho can't believe anyone would be selling *all*)  their metal into the spot market have the advantage of being exposed to rising prices.  Their disadvantage would be when the market turned sour and their profits reduced commensurately.
> Producers will opten mix and match some of these options in order to "balance" their market risk.  For example, recently a gold miner (Croesus) has been unable to satisfy its hedge commitments and is presently under administration because it does not have the finances to buy its way out of its bind. Croesus had the double problem of poor forward prices in a rising market, and inability to meet contracted quantities for delivery.
> This may not answer your question, Kipp, so you might want to use the above info to rephrase it.




Thanks for the reply Rob.  Yes, I am aware of choice of selling unhedged vs. hedged.  No worries, that is not my quesiton here.  
If a producer is selling metals at LME prices, what prices would be received for metal sold over the weekend?  Or is the answer the fairly obvious one, that NO metal is traded over the weekend but rather stockpiled till the LME markets open Monday (though mines/smelters are in production).

My question is just one of academic interest, not of any great importance.


----------



## rederob

Kipp
You have arrived at the correct answer: LME is not open over the weekend.
However, trading is not confined only to what is produced: And what is produced is not necessarily sent to spot for sale - it also accommodates hedges or long term contracts.
In other words, a producer may not be able to sell any of its product to spot because it is already commited, ie "sold".
Therefore, when metals prices go into "backwardation" (spot prices higher than future prices), produces ramp output to sell excess production into spot in order to take advantage.


----------



## YOUNG_TRADER

Would appreciate a post of LME Stock levels please


----------



## NettAssets

Kipp said:
			
		

> Thanks for the reply Rob. Yes, I am aware of choice of selling unhedged vs. hedged. No worries, that is not my quesiton here.
> If a producer is selling metals at LME prices, what prices would be received for metal sold over the weekend? Or is the answer the fairly obvious one, that NO metal is traded over the weekend but rather stockpiled till the LME markets open Monday (though mines/smelters are in production).
> 
> My question is just one of academic interest, not of any great importance.




The LME contracts are also for delivery within 3 months- so when a supplier enters a contract he doesn't need the truck parked out the back. So I would think mining, delivery and supply would all occur 7 days a week, just the paperwork kept to weekdays.


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Would appreciate a post of LME Stock levels please










Supplies went up a bit for zinc, but copper oh my!

thx

MS


----------



## rederob

LME stock levels at close yesterday:


----------



## tour

hi.
Hmmm i was just wondering why there is no inventory out for copper? its being incresing every since. and today another 1000+ 
thxs


----------



## michael_selway

tour said:
			
		

> hi.
> Hmmm i was just wondering why there is no inventory out for copper? its being incresing every since. and today another 1000+
> thxs




Dude yeah 2000+ "in" for copper yesterday






thx

MS


----------



## Kipp

YOUNG_TRADER said:
			
		

> This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,
> 
> 
> 
> LME Warehouse Stocks 17 Jul 2006
> Close           In   Out  +/-        On Warrant      Cancelled
> Zinc   * 202700* 3550 1425 2125       *145075 *      57625



Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations.  "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand?  MS are you still expecting LME to be out of stock by Sept-Oct?


----------



## michael_selway

Kipp said:
			
		

> Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations.  "On warrant" sitting steady today 16th Aug at 145K.
> Is supply catching up with demand?  MS are you still expecting LME to be out of stock by Sept-Oct?




Hi Not Sep-Oct, by the end of the year or next

thx

MS


----------



## rederob

Kipp said:
			
		

> Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations.  "On warrant" sitting steady today 16th Aug at 145K.
> Is supply catching up with demand?  MS are you still expecting LME to be out of stock by Sept-Oct?



Kipp
Based on trend I expect a minimum of 120 trading days before we see zinc around 10,000 tonnes at LME.
What will happen when we get below 50,000 tonnes is that the rate of decline slows as prices increase, and this equation prevents a drying up of inventory as it makes more sense to deliver any surplus metal to LME spot than hold on site.
In any event, investors that do not have a major zinc producer in their portfolio will miss out on some good returns in the next 12 monhts.


----------



## Kipp

rederob said:
			
		

> Kipp
> Based on trend I expect a minimum of 120 trading days before we see zinc around 10,000 tonnes at LME.
> What will happen when we get below 50,000 tonnes is that the rate of decline slows as prices increase, and this equation prevents a drying up of inventory as it makes more sense to deliver any surplus metal to LME spot than hold on site.
> In any event, investors that do not have a major zinc producer in their portfolio will miss out on some good returns in the next 12 monhts.




Hey Rob- could you please post your nice LME sheet to see where the Zinc supplies are at?  I'm keen to see if it has breached 140K yet or if the declines are just cancelled stock getting shipped out.

Though I find it hard to doubt your bullish opinion on Zinc after you called the Nickel shots so well.  Screaming towards $15/lb tonight.... can Zinc do the same?
Thanks.
K


----------



## YOUNG_TRADER

LME Warehouse Stocks 21 Aug 2006 
 Close In Out +/- On Warrant Cancelled 
Copper    122950 1675 525 +1150 112350 10600 
Aluminium    683775 2000 3375 -1375 628425 55350 
Nickel    5826 306 636 -330 1200 4626 
Zinc    180850 0 2100 -2100 151100 29750 
Lead    81300 0 900 -900 75950 5350 
Tin    10995 0 45 -45 10330 665 
Al. Alloy    70200 3900 300 +3600 69220 980 
NASAAC    121580 320 320 0 117700 3880 
174 


There you go Kipper   http://www.basemetals.com/


----------



## rederob

YOUNG_TRADER said:
			
		

> There you go Kipper   http://www.basemetals.com/



Or try the one that has inventories alone:
http://www.basemetals.com/stocks.aspx


----------



## rederob

Kipp
The above link is effectively to 2-day-old data, so latest data shows that Zinc actually declined in headline terms by 625 tonnes last night, and open tonnage sits smack on 145k tonnes.
Great news was over 6,500 tonnes of cancellations yesterday, so withdrawals should remain robust for at least the next fortnight.


----------



## michael_selway

Kipp said:
			
		

> Hey Rob- could you please post your nice LME sheet to see where the Zinc supplies are at?  I'm keen to see if it has breached 140K yet or if the declines are just cancelled stock getting shipped out.
> 
> Though I find it hard to doubt your bullish opinion on Zinc after you called the Nickel shots so well.  Screaming towards $15/lb tonight.... can Zinc do the same?
> Thanks.
> K




Hi Kipp as YT/red has said, can see breakdown below






However heres todays date just out






You can see the 'ins" come in very often and in relatively big amounts, so a price fall coudl happen any time, when the "fake buying" or cancellation stops?






ZInc 145k atm, on warrant

thx

MS


----------



## rederob

MS
You keep mentioning "fake buying" of metals.
I have seen nothing to indicate it exists on LME having followed it for about 5 years now.
Can you please provide some examples.


----------



## Kipp

Thanks fellas,
I find short-term analysis of the LME stocks difficult because Cancellations occur fairly sporadically (as opposed to "Ins" which seem more frequent- though far smaller in terms of tonnage).   Possibly this is caused by the high spot prices.  Zinc consumers wait till the last minute to place orders (in the hope that there will be a fall in the meantime?)

Disclaimer: my viewpoints/opinions expressed on the LME/commodities are worth only about 30% of Rederobs and 50% of YT's (though maybe the same as MS...   )


----------



## dj_420

Sorry guys had this in CBH thread but prob is much more relevant here



China's Zinc Demand to Increase 56% by 2010, Antaike Forecasts 

By Chia-Peck Wong

Aug. 24 (Bloomberg) -- The demand for zinc in China, the world's biggest consumer of the metal, may rise 56 percent by 2010, Beijing Antaike Information Development Co. has forecast. 

The country may need 4.8 million metric tons of zinc by the end of the decade, from 3.08 million tons in 2005, as it requires more of the metal to coat steel to prevent corrosion, Feng Juncong, a senior analyst at Antaike, a research agency that advises the government, said yesterday at a conference. 

``As China's construction and transportation sectors grow, consumption has entered its peak growth rate,'' she said in a presentation in Inner Mongolia, a region in western China. 

Zinc prices in London have surged 75 percent this year and reached a record $4,000 a ton in May on expectations China's expanding economy will require more metals, while smelter output in China has been stymied by a lack of mined material. 

``China will definitely need to rely on imports to fulfill its annual needs'' in the next few years, said Feng, who has been tracking the industry for 12 years and correctly forecast China would become a net importer of refined zinc in 2004. 

The domestic supply of mined zinc is likely to lag behind demand by more than 10 percent this year, pushing up concentrate prices, she said. She didn't provide an estimate of China's zinc production in 2010, saying that the country is likely to remain a net importer till then. 

This year, China's net imports of zinc products, including mined output, or so-called concentrates, are likely to be stable at 860,000 tons, little changed from last year, as higher internationally-traded prices led Chinese smelters to export more, she said. 

Record Forecast 

Zinc prices in London, which have fallen about 16 percent from their record, are likely post a new peak in the fourth quarter as stockpiles continue to dwindle, Feng said. 

``The fundamental demand and supply factors are still good,'' she said, without forecasting how high prices may rise. 

Zinc stockpiles at warehouses monitored by the London Metal Exchange have plunged 55 percent this year to 179,175 tons as of yesterday, the lowest since early 1992. 

China's lead consumption may surge 43 percent to 2.3 million tons in 2010 as demand from lead-acid battery makers soars 65 percent to 1.79 million tons, Feng said. 

The forecast is ``definitely conservative as over the past 10 years, apparent consumption in China has grown 20 percent every year,'' she said. 

Industry consultants including Michael Komesaroff said that developing Inner Mongolia's lead and zinc resources may help China reduce its dependence on imports. 

`Own Resources' 

``China will prefer to develop its own resources rather than buying from overseas,'' Komesaroff, managing director of Urandaline Investments Pty., said by phone from the northeastern Australian state of Queensland on Aug. 21. 

Inner Mongolia is ``highly prospective'' in terms of lead and zinc, he said. 

Of the 1.82 million tons of zinc concentrate produced in China last year, 15 percent came from the autonomous region of Inner Mongolia, making it China's third-biggest producer after Yunnan and Gansu, Feng said. 

The region ranked as China's top producer of mined lead last year, accounting for 15 percent of total output of 630,000 tons, she said. 

There are other advantages exploring for lead and zinc in Inner Mongolia, which possesses China's second-biggest resources of both metals, as many deposits also contain other metals such as silver, she said. 

Inner Mongolia's government plans to spend 2 billion yuan ($251 million) in the next five years to explore for mines, Zheng Fanshen, vice director and general engineer of the region's prospecting and exploitation bureau, told reporters at the conference yesterday. Coal was the first priority, and base metals such as copper, lead and zinc the second, Zheng said. 

To contact the reporter for this story: Chia-Peck Wong in Inner Mongolia at cpwong@bloomberg.net 

Last Updated: August 23, 2006 21:35 EDT


----------



## Sean K

Thanks for the article Cath (ers)

There's no doubt China is a hungry dragon. Still, the US link to it's short term prosperity is important and any consumption out past 2010 is going to rely on the US not imploading. Let's hope. 

Let's also hope China don't find too many resources in the own back yard and keep buying from Australia....


----------



## michael_selway

cathers_420 said:
			
		

> Sorry guys had this in CBH thread but prob is much more relevant here
> 
> China's Zinc Demand to Increase 56% by 2010, Antaike Forecasts
> 
> By Chia-Peck Wong
> 
> Aug. 24 (Bloomberg) -- The demand for zinc in China, the world's biggest consumer of the metal, may rise 56 percent by 2010, Beijing Antaike Information Development Co. has forecast.
> 
> To contact the reporter for this story: Chia-Peck Wong in Inner Mongolia at cpwong@bloomberg.net
> 
> Last Updated: August 23, 2006 21:35 EDT




Thx, but thing is Demand is only one side of the equation

Eg. what do u think will happen to the Zinc Price if:

"China's Zinc Demand to Increase 56% by 2010, Antaike Forecasts, but World Supply likely increase 60% by 2010"

thx

MS


----------



## YOUNG_TRADER

LME Warehouse Stocks 24 Aug 2006 
                Close  In    Out  +/-      On Warrant Cancelled 
Copper    124325 1775 100  +1675   113625       10700 
Zinc        178450 0      725    -725   137550      40900 


Getting close to coppers levels


----------



## michael_selway

YOUNG_TRADER said:
			
		

> LME Warehouse Stocks 24 Aug 2006
> Close  In    Out  +/-      On Warrant Cancelled
> Copper    124325 1775 100  +1675   113625       10700
> Zinc        178450 0      725    -725   137550      40900
> 
> 
> Getting close to coppers levels




wow a ****load of zinc got cancelled! nice   

thx

MS


----------



## Sean K

What does that effectively mean MS?


----------



## michael_selway

kennas said:
			
		

> What does that effectively mean MS?




Alot of Zinc was Sold overnight ie On Warrant decreased by about 8000 tonnes

thx

MS


----------



## rederob

michael_selway said:
			
		

> Alot of Zinc was Sold overnight ie On Warrant decreased by about 8000 tonnes
> 
> thx
> 
> MS



MS
You are a worry!
The zinc was sold a long time ago.
What has happened is that warrants have been exercised  - ie cancelled - and buyers have chosen to take delivery of the metal.
Accordingly, that metal will be moved out of the various warehouses in days/weeks to come, and land in the laps of typical consumers.
I am still waiting for MS to respond to his "fake buying" claim, made a few days ago: Willbe interested to understand where/how this happens.


----------



## YOUNG_TRADER

LME Warehouse Stocks 29 Aug 2006 
 Close In Out +/- On Warrant Cancelled 

Zinc    176700 350 1800 -1450 136425 40275


----------



## michael_selway

rederob said:
			
		

> MS
> You are a worry!
> The zinc was sold a long time ago.
> What has happened is that warrants have been exercised  - ie cancelled - and buyers have chosen to take delivery of the metal.
> Accordingly, that metal will be moved out of the various warehouses in days/weeks to come, and land in the laps of typical consumers.
> I am still waiting for MS to respond to his "fake buying" claim, made a few days ago: Willbe interested to understand where/how this happens.




Hi Red

Basically Nickel "ins" are frequent as you can see, unlike zinc







Put simply, if there are frequent "ins" why is there still alot of "cancellatons"?

Wouldnt it be wise to buy it from the "ins" before they enter LME as "ins", than by jacking up the price by buying the "Open", ie already at LME?

In other words, someone is trying to jacking up the price, but the outside underlying demand/supply is actually in surplus, since theres frequent "ins' atm

thx

MS


----------



## rederob

michael_selway said:
			
		

> Hi Red
> 
> Basically Nickel "ins" are frequent as you can see, unlike zinc
> 
> Put simply, if there are frequent "ins" why is there still alot of "cancellatons"?
> 
> Wouldnt it be wise to buy it from the "ins" before they enter LME as "ins", than by jacking up the price by buying the "Open", ie already at LME?
> 
> In other words, someone is trying to jacking up the price, but the outside underlying demand/supply is actually in surplus, since theres frequent "ins' atm
> 
> thx
> 
> MS



MS
You *must * get a grip on how the market works.
In a balanced market the LME plays little more than a "price setting" role for the global base metals community.
That's because the LME will soak up excess metal supply and store it until demand perks up.
Most metal (even today) continues to avoid the LME because it is shipped, typically, from producer to consumer on long term supply contracts.
By following the inventory totals of respective base metals on LME one can determine when supply or demand are waxing or waning.  These fundamentals determine whether or not a metal's price will strengthen (via greater metal demand) or weaken (via excess metal supply).
Base metals have been experiencing strong demand in recent years, and their prices have risen markedly.
Respective markets determine a "balancing point", whereby inventory level changes turn into price pivot points via the difference between 3 month future and spot metal prices.  
Let's look at copper as a recent example: Prior to its May selldown its backwardation stretched to well over $200/tonne (presently around $20), and its relative strength spun out to an incredible 88 points.  Backwardation was doing its job in getting more metal onto inventory, to the point that supply side issues were being addressed and the market determined that copper prices had peaked for the time being.  Copper continues to be in backwardation and apart from deliveries into Asian warehouses, there is very little available "free" metal elsewhere in the world.
Copper has had lots of "ins" since May, and only slightly less "cancellations" because the supply/demand equation is fractionally favouring "supply".
Nickel has been different in that the equation has favoured "demand".
Zinc is in a separate league, in that flows in to LME warehouses are infrequent, but usually huge (by comparison with other metal percentage movements).  "Outside" activity has been robust throughout this year, and for this reason I believe we are soon to see a huge upside movement in zinc's price: Markets will realise that there is no meaningful supply-side response and backwardations will become the metal's norm in order to rebalance the ledger. 

MS, your point about buying nickel *from the "ins" before they enter LME as "ins"*, is valid, but ignores the profit motive available via the market mechanism of backwardation. (It's valid as Oxiana is selling some of its copper cathode direct to nearby Asian markets at  premium well above LME spot - but examples like this are not common.)
It is a very simple process for a seller to deliver to LME at spot: The location is known, delivery arrangements are straightforward, and the commerce is reliable.
Whereas for a consumer to pre-empt demand, and then find a producer willing to ship to them in the desired quantity, and at a premium acceptable to the seller, is relatively complex.
In times of tight demand LME warehouses provide a rational, reliable, well regulated basis for purchasing metals.


----------



## nizar

Rederob,

Thanks for your reply

It shows your knowledge on these matters and u are truly an asset to this forum

All the best


----------



## comptec

woohooo go AIM  excellent looking increase on Thursday


----------



## dubiousinfo

nizar said:
			
		

> Rederob,
> 
> Thanks for your reply
> 
> It shows your knowledge on these matters and u are truly an asset to this forum
> 
> All the best





 :iagree:


----------



## want-cash

If you want to invest in zinc look no further than AIM resources this baby is set to soar, 26 percent increase yesterday, with volume skyorcketing to over 20 million today. This stock is way undervalued look out for it , it's a strong buy!


----------



## pacer

recon it will fall on monday...they usualy do....26% is too much for one day...wait then hit hit it again.   IDNH.....I do not hold.


----------



## Fab

It won't be a good day for zinc today on the asx . Drop 5% overnight


----------



## michael_selway

Fab said:
			
		

> It won't be a good day for zinc today on the asx . Drop 5% overnight











> Metal temporarily "vanishes" in LME warehouse merger
> By Nick Trevethan
> 396 words
> 23 September 2006
> 02:33
> Reuters News
> English
> (c) 2006 Reuters Limited
> LONDON, Sept 22 (Reuters) - London Metal Exchange (LME) aluminium and zinc stocks dipped on Friday as thousands of tonnes of metal appear to have been removed from warehouses in northeast England, according to data supplied by the LME.
> 
> But the falls -- 4,500 tonnes of zinc and 4,225 of aluminium, held in warehouses in Newcastle and Sunderland, were just part of the exchange's attempts to merge the two reporting locations into one.
> 
> "This isn't correct. It doesn't reflect the real world and potentially causes a disorderly market," a trader said.
> 
> In July, the exchange said it would start to treat warehouses in Newcastle and Sunderland as the same location within SWORD -- the system that manages warrants for LME metal.
> 
> The warehouses themselves did not change and the move was purely administrative.
> 
> "This was an exceptional situation and we have informed members of what would happen," an LME spokesman said.
> 
> "There were notes on the stocks pages today and there will more on Monday explaining the transfer of these warrants from Newcastle and Sunderland to Tyne and Wear."
> 
> Warrant holders were asked to cancel and invalidate warrants for metals in Newcastle and Sunderland before close of business on 21 September.
> 
> "(This is) in order to allow...good time to recreate the warrants under the location of Tyne & Wear before...stock reporting on the 22 September thus ensuring the stock reports will accurately reflect stock holdings in Tyne & Wear.
> 
> But that meant LME stocks of zinc appeared to fall by four percent to 144,075 tonnes, while aluminium inventories seem to 693,050 tonnes.
> 
> "This is ridiculous. It creates the impression that there is less metal in the system than there actually is. The metal is still there, it has just been re-classified. I am sure this could have been done with a lot more finesse," another dealer said.
> 
> A third dealer said: "We have heard of brokers who have had complaints after trying to sell Sunderland material to their clients that doesn't exist according to the exchange data. It creates a very poor impression."
> 
> Dealers expect stocks in the new location, Tyne and Wear, to rise on Monday by about the same amount that they fell on Friday.




http://www.thehindubusinessline.com/2006/09/23/stories/2006092305381400.htm

thx

MS


----------



## michael_selway

want-cash said:
			
		

> If you want to invest in zinc look no further than AIM resources this baby is set to soar, 26 percent increase yesterday, with volume skyorcketing to over 20 million today. This stock is way undervalued look out for it , it's a strong buy!




CBH new website have good regualr reports which not only talk about themselves, but others also!

http://cms.cbhresources.com.au/shops/cbhresources/catalogue/c8
http://cms.cbhresources.com.au//information/pdf/261006a.pdf













> Time Source Headline
> 9/20/2006 4:56:51 AM Dow Jones INTERVIEW: Australia's CBH Pre-commits To Zinc Project
> 
> 
> By James Attwood
> Of DOW JONES NEWSWIRES
> 
> SYDNEY (Dow Jones)--Confident zinc's four-year bull has much further to run, Australia's CBH Resources Ltd. (CBH.AU) is ordering long-lead items for an estimated US$100 million project ahead of a formal go-ahead decision.
> 
> A feasibility study into the Sulphur Springs project won't be ready until month-end but CBH has decided to proceed with the purchase of A$9 million in equipment, said Chairman James Wall.
> 
> "We're in the process of making a pre-commitment for ordering the sag and ball mills - they're long-lead items and in this environment you've got to get yourself in the queue," Wall told Dow Jones in an interview Tuesday.
> 
> Sulphur Springs is in Western Australia's Pilbara region, where giant iron ore expansion projects run by BHP Billiton (BHP) and Rio Tinto (RTP) are adding to the intense global competition for mining materials and labor.
> 
> After a capital investment "in the order" of US$100 million, the mine will process at least 1.25 metric tons of ore a year from 2008, churning out 75,000 tons of zinc concentrate and 65,000 tons of copper concentrate, Wall said.
> 
> But the company is also looking at a model based on 1.5 million tons throughput, thereby exceeding output at the company's only current operating asset, the Endeavour zinc and lead mine in central New South Wales state.
> 
> Sulphur Springs' logical offtaker, at least for the project's zinc concentrates, is CBH's 24.8% shareholder, Toho Zinc Co. (5707.TO) of Japan.
> 
> The commitment to order long-lead items allows the project to progress while CBH puts together a financing package over the next four to five months, Wall said.
> 
> While funds could come from an equity raising or arrangements with offtakers, debt raising is expected to play a large part.
> 
> "All those doors are open, but CBH only has A$6-7 million debt, so there's potential to do quite a lot more without affecting the gearing ratio."
> 
> But Wall said debt financing is unlikely to entail hedging.
> 
> "I'm not against buying puts at the right time in the market but I'm against selling forward the metal, which has the effect of locking you into particular prices, whereas puts are more like an insurance policy."
> 
> Zinc, used to galvanize steel, surged to an all-time high US$4,000 a ton in May before falling back into a volatile, range-bound trading pattern in recent months, prompting some to call the end of a nearly four-year uptrend.
> 
> But Wall said now is "definitely not the right time" to be buying puts, describing current base metal price weakness as "a nice little correction."
> 
> "It's early days - we're not anywhere near the top of the market in my view."
> 
> His confidence is driven by critically low, and still shrinking, global zinc stocks as years of exploration under-investment and structural expansion barriers constrain the supply side's ability to react to China-led global demand.
> 
> The bullish market view gives CBH the confidence to grow on several fronts, he said, pointing to the company's ongoing takeover of Triako Resources Ltd. (TKR.AU), whose Mineral Hill project is expected to add around 30,000 tons to Endeavour's output within 18 months.
> 
> Wall said Endeavour's throughput rate has all but recovered from a "self mining" incident last year: "In the last quarter I would anticipate we'll be back at 1.2 million tons a year."
> 
> At the same time, CBH is waiting for the New South Wales state government's nod to begin an exploration decline at its Broken Hill brownfield project. A formal decision on whether to go ahead with a new underground mine at Broken Hill is expected next year.
> 
> In total, the company is looking to reach around 300,000 tons annual production in the coming years to become Australia's third-largest zinc miner, after Zinifex Ltd. (ZFX.AU) and Xstrata PLC (XTA.LN).
> 
> 
> -By James Attwood, Dow Jones Newswires; 612-8235-2957; james.attwood@dowjones.com
> -Edited by Paul Godby
> 
> 
> (END) Dow Jones Newswires
> 
> September 19, 2006 23:56 ET (03:56 GMT)


----------



## rederob

LME zinc inventories are declining around 1500 tonnes/day and there is about as much copper as there is zinc presently in their warehouses.
However, copper inventories have been relatively static.
October will herald in a massive price breakout for zinc, on trend, and we should look to a 30% price rise before end of year.
If zinc follows copper's early year lead, then a 100% price increase is on the table within 6 months.
Zinc-based equities will be the best performers in the last quarter of this year or my name is MUD.


----------



## tasmanian

i think you could be right there rederob.

the rate zinc is going there will be no stockpile left by the end of this year

cheers


----------



## Sean K

rederob said:
			
		

> LME zinc inventories are declining around 1500 tonnes/day and there is about as much copper as there is zinc presently in their warehouses.
> However, copper inventories have been relatively static.
> October will herald in a massive price breakout for zinc, on trend, and we should look to a 30% price rise before end of year.
> If zinc follows copper's early year lead, then a 100% price increase is on the table within 6 months.
> Zinc-based equities will be the best performers in the last quarter of this year or my name is MUD.




What are your top picks rederob?


----------



## Kipp

rederob said:
			
		

> LME zinc inventories are declining around 1500 tonnes/day and there is about as much copper as there is zinc presently in their warehouses.
> However, copper inventories have been relatively static.
> October will herald in a massive price breakout for zinc, on trend, and we should look to a 30% price rise before end of year.
> If zinc follows copper's early year lead, then a 100% price increase is on the table within 6 months.
> Zinc-based equities will be the best performers in the last quarter of this year or my name is MUD.



Rob, you called the Nickel price blowout to perfection, so it's very hard for me to doubt your opinions now.  How long will we see Zn above 1.50?  For all of 2007?  Or at least FY07?


----------



## YOUNG_TRADER

LME Warehouse Stocks 29 Sep 2006 
                Close In     Out    +/-        On Warrant Cancelled 
Copper    117575 500 4300   -3800           106900 10675 

Zinc    140375        0 1825   -1825           110775 29600 


There is currently about 4kt more zinc on warrant than copper, freaky! 

Long live Zinc the metal for 2006


----------



## michael_selway

Kipp said:
			
		

> Rob, you called the Nickel price blowout to perfection, so it's very hard for me to doubt your opinions now.  How long will we see Zn above 1.50?  For all of 2007?  Or at least FY07?




Rederob called Nickel yeah, but Nickel is a bit diff to zinc, more speculative i think as funds "fake buy" to jack up the price. Too much regular "ins" still







Zinc on the other hand has hardly any "ins" (none if you see above) but cancellations on the increase!

Yeah btw Red, which Zinc shares u think will rise the most at current prices?

thx

MS


----------



## nizar

For what its worth, i reckon the zinc spike to will see it go to us$2.00/lb++ maybe 2,20 or 2,30 who knows. This will probably happen between january-february next year. Then it will ease to maybe 1.80-2.00 and stay there until the end of the year (2007). No significant new supplies will come next year for zinc.

As to which stocks, CBH "seems" a standout to some people, but remember market sentiment towards this stock aint all that great. For some reason people think CBH will rally the most because it hasnt been going anywhere and has been underperforming other zinc stocks. (It has a good reason for that). This, IMO, is FLAWED REASONING. A stock that has been going up is more likely to keep going up then one that has been in a downwards/sideways trend. Its called MOMENTUM. That being said, if i was gonna buy CBH i would wait for the next 2 weeks when TKR holders dump on market. Sulfur Springs will be a beauty.

ZFX mine life problems but still may rally, but i think KZL will be the one that fires the most. With Thalanga from 2007, and Mungana from 2008, they have by far the best pipeline of growth compared to ZFX. Plus u can exploration upside from Admiral Bay. Consensus is 4x increase in NPAT from FY06 to FY07, but how about if Cu stays the same and Zn rockets? ..  
FY08 earnings estimates much less, but if production increase will more than offset any fall in metal prices, which i believe will, then this will be higher still than 2007.

KZL's NPAT this year was achieved with us$1.00/lb zinc and us$2.07/lb copper being the average prices acheived. ANd dont forget about their 17% stake in MLM

In terms of profits, ZFX is the most sensitive to movements in the zinc spot price. BUt due to market sentiment about century's mine life, in terms of sp appreciated, it MAY be limited, but a $2/share divvy is looking likely.

I dont know the order but with CBH, ZFX and KZL, IMO u cannot go wrong...  

Though its a spec, and wont start production until June 2007, AIM could be the darkhorse.


----------



## rederob

K
kennas/MS
My zinc tips are present producers; ZFX, KZL and, with a twist, OXR via Golden Grove (partly because lead prices are also due to kick strongly north).
I think zinc oriented equities will generally do well, but the larger producers are making "real" profits.

Kipp
I think the 5 month consolidation phase for zinc is about to end very soon and quite abruptly.
$1.50 is likely to become long term "support" to zinc prices, and do not be surprised to see the number 3 in front of the price per pound next year.

MS, btw I think your "fake buy" talk is plain silly and does you no favours.
Zinc and nickel have an extraordinary amount in common.  In particular, they add to the price and "value" of steel-based products, yet contribute only a small part to the total price.
As we go forward it is not impossible to see zinc well and truly surpass copper prices and, dare I say, rival nickel.  Nickel can be substituted, but zinc has qualities that make substitution less practical.


----------



## nizar

rederob said:
			
		

> $1.50 is likely to become long term "support" to zinc prices, and do not be surprised to see the *number 3 * in front of the price per pound next year.




Wow good to see you super bullish!


----------



## YOUNG_TRADER

LME Warehouse Stocks 02 Oct 2006 
                Close In     Out   +/-  *On Warrant *      Cancelled 
Copper    116875 300 1000  -700      * 106750 * 10125 

Zinc        139125    0 1250 -1250      *109425* 29700


----------



## YOUNG_TRADER

LME Warehouse Stocks 03 Oct 2006 
            Close   In Out    +/- *On Warrant * Cancelled 
Copper 116850   0   25    -25      *105950 * 10900 

Zinc    138375 300 1050 -750      *105525* 32850 


Less Zinc on warrant than there is Copper!


----------



## Fab

Did I read well on my commsec account today that Zinc went up 3% overnight. I suppose this should be great opening for share such as ZFX on monday


----------



## rederob

Fab said:
			
		

> Did I read well on my commsec account today that Zinc went up 3% overnight. I suppose this should be great opening for share such as ZFX on monday



Actually up 6.3cents so closer to a 4% rise overnight.
As good news was the decline in warehouse stock and a warrant cancellation percentage approaching one third of total metal available.
This can only mean zinc prices will go crazy as the rate of attrition has been maintained for weeks on end and cancellations have been increasing.


----------



## michael_selway

rederob said:
			
		

> Actually up 6.3cents so closer to a 4% rise overnight.
> As good news was the decline in warehouse stock and a warrant cancellation percentage approaching one third of total metal available.
> This can only mean zinc prices will go crazy as the rate of attrition has been maintained for weeks on end and cancellations have been increasing.





Yep, on warrant about to breach the 100k mark

Btw Red, what do u think of Lead atm? maybe "fake buying" from funds or is it genuine demand / supply?






thx

MS


----------



## rederob

michael_selway said:
			
		

> Btw Red, what do u think of Lead atm? maybe "fake buying" from funds or is it genuine demand / supply?
> thx
> MS



MS
As I don't know what "fake buying" is on the LME (because it's not possible), I can't answer that part of your question.
The funds seldom take delivery, unless they get caught out and have to cover a position.
It's easy to determine genuine supply/demand as the data trends are transparent.
In the case of lead, exceptional demand is occurring and supply cannot be met.
Lead is often seen as a laggard, drags the chain, don't go overweight there!
However, the present trend suggests we are likely to see it hit a new high within the month.
Then again, I suspect zinc will be there first, and maybe nickel after that.
Copper and ali are treading water, by comparison.
Bottom line as far as I am concerned is that the commodities boom is have a good tilt at new highs before year end.
I reserve judgement on 2007.


----------



## Kipp

rederob said:
			
		

> MS
> As I don't know what "fake buying" is on the LME (because it's not possible), I can't answer that part of your question.
> .



Possibly MS's term *"fake buying" * refers to speculative buying of commodities (as opposed to Zinc consumer (Maunufacturers etc)... *that is my interpretation* anyway.  Whilst such buying could not be really be dubbed "fake" I agree with MS that spec is worth considering if it is what is driving the Zn shortage (as at any point spec buyers can dry up, as opposted to industry)... in any event... inventories are plummeting at a good rate now (down from 148K approx 2 months ago... thought I'm the first to admit I though tthey had plateaued back in August).
<p>
Rob... was is your thoughts on PEM... they don't get much coverage on the ASF.  Pretty much just another Zinc play like any other?


----------



## rederob

Kipp said:
			
		

> Possibly MS's term *"fake buying" * refers to speculative buying of commodities (as opposed to Zinc consumer (Manufacturers etc)... *that is my interpretation* anyway.  Whilst such buying could not be really be dubbed "fake" I agree with MS that spec is worth considering if it is what is driving the Zn shortage (as at any point spec buyers can dry up, as opposed to industry)... in any event... inventories are plummeting at a good rate now (down from 148K approx 2 months ago... thought I'm the first to admit I though they had plateaued back in August).
> <p>
> Rob... was is your thoughts on PEM... they don't get much coverage on the ASF.  Pretty much just another Zinc play like any other?



Kipp
PEM is hedged for near half their production this year (see p.63 of PEM Annual Report) at below AU$3000/tonne while our prevailing spot prices are at least AU$1500/tonne greater.
I think PEM is a good equity, but I would rather have money on an unhedged producer like KZL or ZFX in this environment.

In relation to "fake buying", if inventories are declining then buying must be real (speculators do not go through the trouble of buying, taking delivery, storing, and re-selling: or they would not be speculators!).
I have another buy order on ZFX today, and will go "at market" if it is not filled before close today.
Zinc is getting seriously tight and consumers will start to hunt around the globe for it in a few months time.


----------



## michael_selway

rederob said:
			
		

> Kipp
> PEM is hedged for near half their production this year (see p.63 of PEM Annual Report) at below AU$3000/tonne while our prevailing spot prices are at least AU$1500/tonne greater.
> I think PEM is a good equity, but I would rather have money on an unhedged producer like KZL or ZFX in this environment.
> 
> In relation to "fake buying", if inventories are declining then buying must be real (speculators do not go through the trouble of buying, taking delivery, storing, and re-selling: or they would not be speculators!).
> I have another buy order on ZFX today, and will go "at market" if it is not filled before close today.
> Zinc is getting seriously tight and consumers will start to hunt around the globe for it in a few months time.




hi red what do u think of CBH, are they unhedged also?

yeah ZFX and KZL, are defintely good zinc companies, zfx will also pay good franked dividends

thx

MS


----------



## 2020hindsight

Johnny found a gold pan lying near a stream 
Johnny shook some mud around and thought he saw a gleam
Pulse became a Latin dance and life a grinning dream 
Since then Johnny's featured... in a mental health scheme
Double check the barricades and lock the little lever, 
A most familiar case of the gold bloody fever..

John gets well pronounces "hell, I'll change my tune to zinc"
wrote out IOU's till he'd run right out of ink
dumped it on the ASX and bought his wife a mink
then the ASX went mad, ....and back came Johnny's blink 
Straight jacket over here he's singing like a diva
the first of many cases of the zinc bloody fever.

THAR'S ZINC IN THEM THAR HILLS!! IM OFF!!

Just to confuse you here's a quote that I don't understand either ...Kin Hubbard: It's pretty hard to tell what does bring happiness. Poverty an' wealth have both failed


----------



## rederob

2020
The Tooth Fairy brings happiness, or was that the stork?!?!?

MS
CBH is totally unhedged.
There are many good zinc equities - but when the prices are at their highest, always buy the biggest unhedged producers in preference.

ZFX 70cent ff div coming soon and there might be a run on it in the next few days.


----------



## nizar

michael_selway said:
			
		

> hi red what do u think of CBH, are they unhedged also?




I realise this question wasnt directed at me but ill take a stab.

I reckon CBH has massive potential but poor market sentiment is really hurting it at the moment.

I will buy it when:
*Endeavour 100% production is confirmed
*Sulfur Springs BFS results are released (these should be a beauty)

And the price is above 59c so no more overhead resistance and is into blue skies.

Endeavour's zinc production is 125ktonnes per year. Makes KZL look very ordinary.


----------



## ned1

Hi Nizar

You say that you won't get back in to CBH until it passes 59c. How far do you think it will run once it passes this resistence?


----------



## nizar

ned1 said:
			
		

> Hi Nizar
> 
> You say that you won't get back in to CBH until it passes 59c. How far do you think it will run once it passes this resistence?




After 59s is broken it will be in blueskies and i think it will really go hard. Its hard to quantify exactly a dollar figure.

Well since i am anticipating a massive run in the zinc spot price which will be massive. They are forecast to earn 12cps at current zinc prices. When the market starts looking at their growth profile with sulfur springs and broken hill and zinc spot starts firing, $1-$1.50 is not unreasonable in the next 3-6months in my opinion.

I dont hold this one.


----------



## rederob

nizar said:
			
		

> Endeavour's zinc production is 125ktonnes per year. Makes KZL look very ordinary.



Are you sure?
?
Contained zinc versus zinc concentrate!


----------



## nizar

Zinc Rises a Fourth Straight Day; Supply Growth May Lag Demand 

By Chia-Peck Wong

Oct. 10 (Bloomberg) -- Zinc rose for the fourth straight day in London on forecasts that supply may not grow quickly enough to meet rising demand from steelmakers. 

Prices of the metal, used to galvanize steel, have almost doubled this year after inventories fell 66 percent as zinc miners didn't increase production fast enough. 

``It's quite possible we will see even higher prices in the short term,'' Stephen Briggs, analyst at Societe Generale, one of 11 companies that trade on the floor of the London Metal Exchange, said in a presentation today. 

Zinc for delivery in three months rose $20, or 0.6 percent, to $3,670 a metric ton at 1:22 p.m. in London. Prices have gained 11 percent since Oct. 4. 

Stockpiles of the metal fell for the 11th straight day to 133,475 tons, the exchange said today in a daily report. Global supply of refined zinc is likely to lag behind consumption by 420,000 tons this year, Briggs said. 

Supply will continue to remain short of demand next year, Merrill Lynch & Co. analyst Francisco Blanch said in a report dated yesterday. 

Copper fell $45, or 0.6 percent, to $7,405 a ton on the LME. Stockpiles of copper tracked by the exchange increased 325 tons to 114,025 tons, according to the exchange. 

Copper for December delivery fell 4.20 cents, or 1.2 percent, to $3.371 a pound on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.


----------



## michael_selway

rederob said:
			
		

> Are you sure?
> ?
> Contained zinc versus zinc concentrate!




Hi Red

Whats thes the difference?

Also ZFX produces 547k tonnes per yr if you see below, but is this contained zinc or zinc concerntrate?







thx

MS


----------



## rederob

michael_selway said:
			
		

> Hi Red
> Whats thes the difference?
> Also ZFX produces 547k tonnes per yr if you see below, but is this contained zinc or zinc concerntrate?
> thx
> MS



The difference is significant as the concentrate cannot be 100% zinc: Like drinking scotch and water, or scotch!
The chart above needs to be updated, especially with respect to KZL.
An important aspect the chart misses is "profit margin"; why is CBH not outperforming?


----------



## Sean K

DJ FOCUS:Zinc May Hit Record As Stocks Fall, Specs Stay Put  10/10/2006 06:55PM AEST  

   By James Attwood 
   Of DOW JONES NEWSWIRES 

SYDNEY (Dow Jones)--The price of zinc may hit new record highs short term as global stocks of the galvanizing metal continue to shrink and investor flows into metal markets prove more resilient than expected, analysts said this week. 

Since surging to an all-time high of $4,000 a metric ton in May this year, as speculative activity amplified a tightening fundamental picture, zinc has fallen into a volatile trading pattern in line with other commodities. 

But even as some analysts argue the current volatility is a sign the base metals complex has started a cyclical downtrend after years of rising prices, zinc's supply and demand equation continues to improve. 

Current levels of London Metal Exchange zinc stocks have plummeted from 393,300 metric tons at the start of 2006 to 15-year lows of around 135,000, representing just a week of global consumption, as producers struggle to catch China-led demand. 

Total stocks - including around 250,000 tons of producer stocks and 100,000 tons of consumer stockpiles - amount to 3.1 weeks of consumption, a level that is "sub-critical," according to CRU analyst Graham Deller. 

The tight supply situation is yet to reach the critical levels currently being experienced in the nickel market where stocks equal just 1.5 days of consumption and prices of the stainless steel ingredient continue to strike all time high levels. 

However, zinc warehouse inventories are shrinking at an average rate of 1,440 tons a day, putting stocks on track to reach 1.5 days of global consumption, or about 45,000 tons, in the middle of January 2007. 

"This figure (1.5 days) is approximately the same level at which nickel stocks are currently, and we have seen the effect that this level of tightness has had on prices," said Standard Bank. 

Other analysts note that zinc, despite a sharp correction from May's high and ongoing volatility, remains around $3,700/ton, nearly double of where it started the year and within striking distance of the $4,000 record. 

"Any supply interruption will put a strain on this market since there is very little stock cover and potential for that activity to be magnified by speculators getting back into the market," said National Australia Bank minerals economist Gerard Burg. 

Rising Risk Of Supply Disruptions 

The risk of supply disruptions is increased by the fact that producers "are working flat out, making them more susceptible," the chief executive of Australia's Zinifex Ltd. (ZFX.AU), Greig Gailey, told Dow Jones Newswires Monday. 

Macquarie Research commodities analysts agree. In a report this week, Macquarie said even a small disruption "could cause zinc to do what copper and nickel have done this year when stocks of those commodities have basically run out." 

NAB's Burg expects the zinc market to remain in deficit next year and average around $3,700/ton, bucking the trend of easing tightness and prices in other base metals. 

Others expect zinc to move back into balance in 2007 after three consecutive years of deficit. On such a view, Michael Cuoco of Mitsui Bussan Commodities (USA) Inc. told this week's LME Seminar that prices are expected to average $2,800/ton in 2007. 

And offsetting supply risks is "the risk demand could weaken more than we have assumed in our base case, particularly with the weakness in the US construction and automotive sectors - key end-uses for galvanized steel," Macquarie Research said. 

But even many of those forecasting lower zinc prices next year acknowledge the growing upside price risk created by shrinking global stocks and signs speculative money flows may be less fickle than thought. 

Citigroup's current forecast is for zinc to average $2,650/ton next year, around $1,000 below current levels on the premise that investment flows won't be sustained despite positive fundamentals. 

But Citigroup's global commodity analyst Alan Heap hinted the forecast may be revised. 

"In the last few weeks I've become more convinced that speculative flows may prove to be more sustained than I had previously expected - that's not reflected in our price forecasts," Heap told Dow Jones Newswires.


----------



## YOUNG_TRADER

LME Warehouse Stocks 24 Oct 2006 
                Close        In Out +/- On Warrant Cancelled 
Copper   * 120825*    8175 425 +7750 114950 5875 

Zinc      *  117375   *      0 2525 -2525 86750 30625


----------



## michael_selway

YOUNG_TRADER said:
			
		

> LME Warehouse Stocks 24 Oct 2006
> Close        In Out +/- On Warrant Cancelled
> Copper   * 120825*    8175 425 +7750 114950 5875
> 
> Zinc      *  117375   *      0 2525 -2525 86750 30625




thx YT

btw which Zinc stocks do you hold atm (if u dont mind me asking)?

thx

MS


----------



## YOUNG_TRADER

None funnily enough, switched out of JML and CBH (my favourite by far) into Uraniums EVE and MTN

May do some CFD's on PEM though


----------



## michael_selway

YOUNG_TRADER said:
			
		

> None funnily enough, switched out of JML and CBH (my favourite by far) into Uraniums EVE and MTN
> 
> May do some CFD's on PEM though




Oh ok, im still holding ZFX, PEM, CBH, however sold out of KZL too earlly i think

But i still think theres more upside in all these zinc stocks, dont think the super spike for Zinc price has come yet

Nickel has already super spiked imo due to "fake buying" from LME. Also Nickel "on warrant" never went to 0 if i recall correctly. However i think Zinc may.

thx

MS


----------



## YOUNG_TRADER

Oh MS I forgot, I've got a decent holding of BSM will be a zinc dark horse IMO, very very cheap around $15m, see the BSM thread if your interested



Nice article


*MI WEEK IN REVIEW: Zinc bulls on the front foot as buy signals accumulate 


Metals Insider - 23 October 2006 * 


MI WEEK IN REVIEW: Big sister copper may be struggling to make further upside progress, for now at least, but zinc has finally managed to de-couple itself from the red metal with the many zinc bulls finally enjoying their day in the sun. 



The market spent much of last week toying with the $4,000 level but there was plenty of chatter on the London “street” about the next big number at $5,000 such is the strength of bull sentiment washing over this market right now. 



Bull Drivers 

Zinc is enjoying a confluence of bull signals right now. The key driver is the seemingly relentless decline in exchange inventories with draws coming through daily, zero arrivals since the first day of the current month and plenty of metal sitting in the cancelled tonnage departure lounge. 



As exchange stocks dwindle, the nearby market structure is tightening. The cash-3s benchmark period ended last week valued at $35 backwardation, compared with $22.50 back the previous week and with small contango at the start of the month. 



A tightening futures market structure is being mirrored in the physical market with premiums rising, particularly in regions such as Europe which are now starting to run low of LME-registered tonnage. 



Underlying it all is the refined market production-consumption deficit, which the World Bureau of Metal Statistics estimated at 236,000t in the first eight months of this year. 



The unlikely catalyst for last Monday's surge higher across the LME complex was tin””responding to its own supply dynamics in Bolivia and Indonesia””but zinc needs extremely little encouragement these days to rally on its own. 



It notched up a massive $170 day-to-day gain on Monday, closing the day valued at $3,960. Tuesday brought the first foray above the $4,000 level””a big technical number in all sorts of ways--and it found a band of trade selling and speculative profit-taking up there. 



Tuesday and Wednesday were generally down days across the metals complex, traders fretting anew about poor macro data out of the US , which has come to symbolise the general fear of slowing global economic growth as we exit this year and enter 2007. 



But, as they say, you can't keep a good thing down and with everyone and his dog still friendly to this market it shrugged off the sense of disappointment that enveloped copper towards the end of last week and was back testing the sellers at $4,000 and just above on Friday morning. In the end, it couldn't get the foothold there it was looking for but the bulls won't argue with the close at $3,970””a week-to-week gain of $180 and a year-to-date gain of 108%. 



There's Still Time 

It seems that just about every passing day brings evidence of the pending supply-side response to the current historically high prices. Last week we got an announcement from Australian production Perilya that it is boosting production next year at its Broken Hill operations with development of a third stream of concentrates at the complex. 



Another Australian company, AIM Resources, said it has raised the financing for its Perkoa mine in the African country of Burkina Faso and it will fast-track development to advance the original schedule by around a year. 



In the interim the latest batch of Chinese production figures showed still-strong refined metal growth in the country. 



But the bulls can blissfully ignore the building tidal wave of new concentrates supply on the argument that it is still too far in the future to make much difference today. As long as those LME stocks continue sliding towards critical levels, there is still time for zinc to finally make good on all those months of bull promise. 



As one local commented last week: “With new highs being made…it is difficult to see what is going to stop this one for now. “ Indeed!


----------



## Sean K

Zinc up 4% overnight. 

Another great day for Zinc holders. More records to tumble I'd say, with profit taking after lunch maybe.


----------



## nizar

michael_selway said:
			
		

> Oh ok, im still holding ZFX, PEM, CBH, however sold out of KZL too earlly i think
> 
> But i still think theres more upside in all these zinc stocks, dont think the super spike for Zinc price has come yet
> 
> Nickel has already super spiked imo due to "fake buying" from LME. Also Nickel "on warrant" never went to 0 if i recall correctly. However i think Zinc may.
> 
> thx
> 
> MS




wat r u doing selling KZL?? that stock is a winner... but yeh actually i sold it was well during may it feel like 30% it was a bit 2 much for me.... but bought it again 2 weeks ago at $5.95.. not planning to sell it until double digits   

i also got CBH and that rounds out the zincers for me...

nickel never went to zero because the traders/speculators/hedge funds that were accumulating as the supplies drop are more than happy to sell it at these high prices, same thing with zinc, there is someone accumulating at these prices. I mean, if i had about 40million dollars to spare, id pick up 10,000tonnes (obviously not at one go, but maybe 1ktonne a day or a week)and sell it in 6 months, problem is id need someonewhere to store it, anybody got a huge warehouse somewhere?


----------



## rederob

MS
You insist on "fake buying" nonsense and have never provided a shred of evidence for it.
There is a good reason - it does not happen on the LME, just ask Liu Quibing if you are able to find him: A man who suffered the indignity of bad decisions.
I think it is important that you start to learn something if you are going to continue posting - so do yourself a favour.

While I agree that zinc has a long way to go, I also think that early speculation on nickel's demise is unwise.
Until the commodity can move from its its incredible tighness, the chance of further upside remains, and it could be significant.  We just need a big adverse event from a major supplier.
I certainly do not discount nickel hitting $40k in the first quarter of 2007.


----------



## nizar

rederob said:
			
		

> MS
> You insist on "fake buying" nonsense and have never provided a shred of evidence for it.
> There is a good reason - it does not happen on the LME, just ask Liu Quibing if you are able to find him: A man who suffered the indignity of bad decisions.
> I think it is important that you start to learn something if you are going to continue posting - so do yourself a favour.
> 
> While I agree that zinc has a long way to go, I also think that early speculation on nickel's demise is unwise.
> Until the commodity can move from its its incredible tighness, the chance of further upside remains, and it could be significant.  We just need a big adverse event from a major supplier.
> I certainly do not discount nickel hitting $40k in the first quarter of 2007.




LOL i dont think Liu Quibing is around anymore.


----------



## michael_selway

nizar said:
			
		

> wat r u doing selling KZL?? that stock is a winner... but yeh actually i sold it was well during may it feel like 30% it was a bit 2 much for me.... but bought it again 2 weeks ago at $5.95.. not planning to sell it until double digits
> 
> i also got CBH and that rounds out the zincers for me...
> 
> nickel never went to zero because the traders/speculators/hedge funds that were accumulating as the supplies drop are more than happy to sell it at these high prices, same thing with zinc, there is someone accumulating at these prices. I mean, if i had about 40million dollars to spare, id pick up 10,000tonnes (obviously not at one go, but maybe 1ktonne a day or a week)and sell it in 6 months, problem is id need someonewhere to store it, anybody got a huge warehouse somewhere?




you mean you sold KZL when it was very low?

Yeah its a winner beacuse its got the best mine life out of those zinc stocks, however thus it also has a high PE

However they shoudl all rise as time comes regardless, and imo esp the low PE ones % wise

thx

MS


----------



## Sean K

michael_selway said:
			
		

> you mean you sold KZL when it was very low?
> 
> Yeah its a winner beacuse its got the best mine life out of those zinc stocks, however thus it also has a high PE
> 
> However they shoudl all rise as time comes regardless, and imo esp the low PE ones % wise
> 
> thx
> 
> MS




What are you holding MS?


----------



## michael_selway

kennas said:
			
		

> What are you holding MS?




ZFX, PEM, CBH but wish i hadnt sold KZL in hindsight

So tempting to buy more still....

What zinc stocks are u holding Kennas?   

thx

MS


----------



## Sean K

michael_selway said:
			
		

> ZFX, PEM, CBH but wish i hadnt sold KZL in hindsight
> 
> So tempting to buy more still....
> 
> What zinc stocks are u holding Kennas?
> 
> thx
> 
> MS




Does BHP mine zinc?   

I sold CBH and JML a little while ago.  :whip  Bad kennas!


----------



## michael_selway

kennas said:
			
		

> Does BHP mine zinc?
> 
> I sold CBH and JML a little while ago.  :whip  Bad kennas!




yes BHP does mine zinc, but its not leveraged to zinc beacuse its zinc production isnt a high % compared to the other things it mines

i.e changes in zinc price doesnt affect BHP's bottom line much

thx

MS


----------



## CanOz

kennas said:
			
		

> Does BHP mine zinc?
> 
> I sold CBH and JML a little while ago.  :whip  Bad kennas!




Kennas mate....i'm stunned....i thought you would hold CBH until they ran out of zinc!


----------



## michael_selway

CanOz said:
			
		

> Kennas mate....i'm stunned....i thought you would hold CBH until they ran out of zinc!




canauss, what zinc stocks do you hold atm?   

thx

MS


----------



## dj_420

im holding CBH and JML

in hindsight it was a good move to get into undervalued zinc stocks about 2-3 months ago, i thought that zinc stocks would run when LME zinc supplies ran out, looks like we might get a really nice run right through till mid 2007 early 2008. and it seems that zinc is making a run early on short supply expectations.

hasnt been much coverage on JML but its been valued at 80 cents before production, leading up to production valuations will increase dramatically.


----------



## CanOz

michael_selway said:
			
		

> canauss, what zinc stocks do you hold atm?
> 
> thx
> 
> MS




Only CBH.


----------



## nizar

michael_selway said:
			
		

> you mean you sold KZL when it was very low?
> 
> Yeah its a winner beacuse its got the best mine life out of those zinc stocks, however thus it also has a high PE
> 
> However they shoudl all rise as time comes regardless, and imo esp the low PE ones % wise
> 
> thx
> 
> MS




MS
I beg to differ.
KZL justifies its relatively high pe ratio because of its pipeline of growth. Thats why people are willing to pay a higher multiple for it than ZFX, for example. CBH has been crippled with problems. Look at my KZL versus ZFX post on KZL thread to know why i prefer the later even though it trades ona  lower

I bought KZL at $2.45 and sold at $3.70, after it had peaked at $4.70, coz i seriously thought it would go to zero, in the end went as low as $2.89. Really got hammered those days. I got back in about 3 weeks ago at $5.95. This time i will not sell it for a while.


----------



## nizar

dj_420 said:
			
		

> and it seems that zinc is making a run early on short supply expectations.




Not quite.
In MAy the LME stocks was at 250ktonnes and the price peaking at $us1.80/lb. Now its only about 5c higher at $us1.85/lb while the stocks are sitting at less than half at 115ktonnes.

The zinc price is lagging bad. Not long now before it catches up.


----------



## nizar

rederob said:
			
		

> Are you sure?
> ?
> Contained zinc versus zinc concentrate!




correct rederob,

endeavour at 100% produces 60ktonnes/pa of zinc metal (contained zinc)


----------



## rederob

nizar said:
			
		

> correct rederob,
> 
> endeavour at 100% produces 60ktonnes/pa of zinc metal (contained zinc)



Cheers nizar
Just as oil has held back gold, so too has copper held back zinc.
However, at certain points in time, markets "disconnect".
That time for zinc has arrived, and LME inventories will now take the toll that previously were reflected by copper prices in the period to May this year.
Although zinc hopefuls and smaller producers will get a coat tail ride, the likes of ZFX and KZL will derive substantial profits, as will OXR from Golden Grove.
I therefore will pay little attention to daily price movements, and concentrate on the weekly numbers instead.
I suggest we look at retitling the thread to "2007", despite nickel having that tagline.


----------



## YOUNG_TRADER

rederob said:
			
		

> I suggest we look at retitling the thread to "2007".





Sowie


----------



## itchy

Hey does anyone know any interesting up and coming zinc stocks??
Some smaller players worth having a look at??
I currently hold PDZ, PEM and CBH

cheers.


----------



## sleeper88

itchy said:
			
		

> Hey does anyone know any interesting up and coming zinc stocks??
> Some smaller players worth having a look at??
> I currently hold PDZ, PEM and CBH
> 
> cheers.




check out TRO, AAR, MLS, MTB

i think TRO just released a resource estimate of approx 10Mt @ 10% Zn 

i dont hold any of the above but all are on my watchlist


----------



## itchy

thanks sleeper,

they look interesting indeed, especially aar
might have to keep an eye on them!

cheers


----------



## Fab

Big dow drop overnight but I believe zinc went up 2% so ZFX and the like should  still do well on monday


----------



## imajica

sleeper88 said:
			
		

> check out TRO, AAR, MLS, MTB
> 
> i think TRO just released a resource estimate of approx 10Mt @ 10% Zn
> 
> i dont hold any of the above but all are on my watchlist





agree! will be buying into MLS and TRO on Monday - these are my preferred spec zinc plays

fundamentals are too good to ignore


----------



## Fab

Any ideas where to find the lME index graphs for comodities ?


----------



## johnmwu3

LME Zinc closed 4175 USD, and stock 110800Ton   --3100t
Zinc share will up Monday


----------



## MalteseBull

kitcometals.com

LME: 1.90 almost


----------



## nizar

imajica said:
			
		

> agree! will be buying into MLS and TRO on Monday - these are my preferred spec zinc plays





wat about JML and AIM?


----------



## YOUNG_TRADER

nizar said:
			
		

> wat about JML and AIM?





To put it in perspective, 

*JML's* operation is a sure thing as it has funding equipment, mine plan/construction staff etc in place + CSM as major holder/financial backer

*TRO* is uncertain, however *its mkt cap is like 1/6th of JML, yet its deposit is of similar grades and is 10x the size of JML's* and finally *its 51% owned by a large Candian/Toronto listed resource company, so funding shouldn't be a problem,*

TRO is an amazing find and once again backed by you know who, Mr Barry Dawes of Martin Place Securities, he was recommending this stock at 10c, I should follow his advice (I did with UXA  ) but not with AUM/CDU, SMM or CMR   

As we all know he's an excellent promoter so expect TRO to rocket, see the TRO thread for my calcs on how undervalued it is


----------



## YOUNG_TRADER

_The price of zinc has more than doubled since the start of 2006, while stocks have fallen by over 80 percent since their peak in mid-2005.

Zinc inventories in LME warehouses were at their lowest in more than a decade at 110,800 tonnes, down by 3,100, against *average daily world consumption of around 29,000 tonnes*._


----------



## sleeper88

how long can this zinc bull run last?!? (preferably a couple more years   ), can someone give me a rough indication of the number of zinc projects moving towards production soon, around the world which can increase the supply of zinc?


----------



## nizar

YOUNG_TRADER said:
			
		

> To put it in perspective,
> 
> *JML's* operation is a sure thing as it has funding equipment, mine plan/construction staff etc in place + CSM as major holder/financial backer
> 
> *TRO* is uncertain, however *its mkt cap is like 1/6th of JML, yet its deposit is of similar grades and is 10x the size of JML's* and finally *its 51% owned by a large Candian/Toronto listed resource company, so funding shouldn't be a problem,*
> 
> TRO is an amazing find and once again backed by you know who, Mr Barry Dawes of Martin Place Securities, he was recommending this stock at 10c, I should follow his advice (I did with UXA  ) but not with AUM/CDU, SMM or CMR
> 
> As we all know he's an excellent promoter so expect TRO to rocket, see the TRO thread for my calcs on how undervalued it is




Thanks YT
Is he the dude that put a $25/share valuation on CDU?
Hes a champion, every1 in this world only cares about making money for themselves; and the mustve made a squillion over that "valuation", what about the little guys who got burnt? Thank God i wasnt one of them...

TRO definately worth looking into....
Still a long, long way to production though..

YT what do u think of AIM, production scheduled for next year and their grade is 14.5% zinc? But i must admit its all still inferred but they have got funding... it took 6 months+ but it usually is a struggle to fund an inferred resource....


----------



## michael_selway

rederob said:
			
		

> Cheers nizar
> Just as oil has held back gold, so too has copper held back zinc.
> However, at certain points in time, markets "disconnect".
> That time for zinc has arrived, and LME inventories will now take the toll that previously were reflected by copper prices in the period to May this year.
> Although zinc hopefuls and smaller producers will get a coat tail ride, the likes of ZFX and KZL will derive substantial profits, as will OXR from Golden Grove.
> I therefore will pay little attention to daily price movements, and concentrate on the weekly numbers instead.
> I suggest we look at retitling the thread to "2007", despite nickel having that tagline.




Red can you please explain to me why theres so many "ins" warrantings for Nickel in the past week? (on warrant is 5544 now, lowest was 800)

Is it because theres excess supply out there?












Also in the "LisbonOutlook.ppt" file from International Lead and Zinc Study Group, the below grpah which shows Zinc Stocks






But how come it shows 600k stocks at 2006?, is it beacuse its LME stocks + other warehouses?

thx

MS


----------



## rederob

MS
Every time nickel prices go into orbit, a small number of supply chain merchants take advantage of LME spot and deliver into it.  Apart from that Norilsk is usually the largest supplier into Europe and it has been their practice for years to manipulate prices to the maximum extent.
Don't forget that consumers also refrain from buying into price strength, so we have a natural market reaction, and it will feed the warehouses for a short period.
The overriding consideration is what will happen next?
Is it a guessing game, or can we really know?
The answer is the latter.
The consumers of nickel (mostly for stainless steel) have full order books into 2007 and no real letup is in sight.
Can the supply chain overwhelm LME warehouses?
Not in the short term, especially as more incoming nickel will reduce prices and take away the premium for delivering into spot.
So expect the norm to be "tightness", with dips to possibly $25k and rises to $35k and beyond into 2007.

In relation to your zinc chart, it includes the full spectrum of available metal - at LME, with merchants, and with consumers. Don't forget that most consumers maintain their own stockpiles and keep these at levels which ensure their production facilities are not closed due to lack of raw materials.
The price hike relies on a small number of consumers bidding for metal and "topping" up their inventory so that when spot prices do get so high, they drawdown from their own material.
What we now have is this "small" pool of consumers growing in size - thus the constant and heavy drawdowns.
Note also that zinc cancellation rates have declined sharply in the past fortnight.  Simple reason is that consumers are reluctant to pay the higher prices and are hoping their will be a zinc price retrace that will allow them back in.
Effectively we now have in place a "ratchet" process, whereby whenever zinc prices relapse, the ratchet locks in for a period while the market settles itself, and then off we go again...... higher.

Downside will only come when global industrial production falters badly (note that the US housing market collapse is so far only affecting Comex copper stocks).

A far as I can tell, nickel, lead and zinc are in good medium term fettle, copper will break up or down (?) and aluminium is defying the odds by also rising in price.

The commodity bull is alive and well.


----------



## michael_selway

rederob said:
			
		

> MS
> Every time nickel prices go into orbit, a small number of supply chain merchants take advantage of LME spot and deliver into it.  Apart from that Norilsk is usually the largest supplier into Europe and it has been their practice for years to manipulate prices to the maximum extent.
> Don't forget that consumers also refrain from buying into price strength, so we have a natural market reaction, and it will feed the warehouses for a short period.
> The overriding consideration is what will happen next?
> Is it a guessing game, or can we really know?
> The answer is the latter.
> The consumers of nickel (mostly for stainless steel) have full order books into 2007 and no real letup is in sight.
> Can the supply chain overwhelm LME warehouses?
> Not in the short term, especially as more incoming nickel will reduce prices and take away the premium for delivering into spot.
> So expect the norm to be "tightness", with dips to possibly $25k and rises to $35k and beyond into 2007.
> 
> In relation to your zinc chart, it includes the full spectrum of available metal - at LME, with merchants, and with consumers. Don't forget that most consumers maintain their own stockpiles and keep these at levels which ensure their production facilities are not closed due to lack of raw materials.
> The price hike relies on a small number of consumers bidding for metal and "topping" up their inventory so that when spot prices do get so high, they drawdown from their own material.
> What we now have is this "small" pool of consumers growing in size - thus the constant and heavy drawdowns.
> Note also that zinc cancellation rates have declined sharply in the past fortnight.  Simple reason is that consumers are reluctant to pay the higher prices and are hoping their will be a zinc price retrace that will allow them back in.
> Effectively we now have in place a "ratchet" process, whereby whenever zinc prices relapse, the ratchet locks in for a period while the market settles itself, and then off we go again...... higher.
> 
> Downside will only come when global industrial production falters badly (note that the US housing market collapse is so far only affecting Comex copper stocks).
> 
> A far as I can tell, nickel, lead and zinc are in good medium term fettle, copper will break up or down (?) and aluminium is defying the odds by also rising in price.
> 
> The commodity bull is alive and well.




Thanks red for that, also 2 further questions from what you wrote

1) small number of supply chain Nickelmerchants:

How many Nickel stocks do they have? where did they get them in the first place? These people dont consume Nickel obviously?

2) zinc cancellation rates have declined sharply in the past fortnight

True, but thing is there no "ins" either, so it not really a bad thing. Also how comes there no "small number of supply chain zinc merchants" selling into LME at these high prices?

thx

MS


----------



## rederob

MS
Nickel merchants typically work with a small number of consumers and source their material at competitive rates: In some cases they may indeed be regarded as the consumer company's "purchasing dep't".
I don't know how much material they have, and I suspect industry analysts would now be guessing badly as well.
I suspect dominant resupply to LME is via actual producers, who use the simplicity and certainty of delivering into LME spot rather than mess around with small orders to a myriad of consumers across the globe.

In relation to zinc "ins", again, your point is *not *well made.
For the market to be excited we are looking at demand, and not supply.
"Ins" are supply.
For the headline figure to collapse, we need drawdowns: These come from warrant cancellations and represent the demand side of the equation.
I have little doubt that demand will pick up soon as the drawdown rate implies strong demand: It's just that the high price of zinc is suppressing buyers.
Very soon they will not have a choice: They will be forced into the same position that nickel consumers presently are in - must buy!


----------



## Fab

Anyway monday should be a great day again for resources stock if I go by the zinc, nickel,lead,aluminium increase on overnight.


----------



## michael_selway

Fab said:
			
		

> Anyway monday should be a great day again for resources stock if I go by the zinc, nickel,lead,aluminium increase on overnight.




do u reckon the lower DOW will have any affect also on these stocks?

thx

MS


----------



## Fab

I don't believe so as we have seen in the past a drop in the DOW resources stocks going up strongly. It might have a slowing effect but I believe resources based on the metal I mentioned in my previous post should do well on monday


----------



## nizar

Fab said:
			
		

> I don't believe so as we have seen in the past a drop in the DOW resources stocks going up strongly. It might have a slowing effect but I believe resources based on the metal I mentioned in my previous post should do well on monday




Short-term share price movements shouldnt deter you from the *bigger picture*. Zinc is running out and the producers for a 6-12month hold will make you richer than your wildest dreams. For FY2007, producers like ZFX and KZL will have margins >us$2/lb on average IMO, and their net profits will be 2.5billion and 200million respectively. As for CBH, which is now profitable, hartleys 100million NPAT estimate was based on zinc averaging us$1.50/lb. Of course any sort of correction should be used as a top up opportunity, well thats my plan anyway. How long before we hit us$2/lb? I reckon before the end of the year, and after that these current prices will seem like a bargain to the smelters.


----------



## michael_selway

nizar said:
			
		

> Short-term share price movements shouldnt deter you from the *bigger picture*. Zinc is running out and the producers for a 6-12month hold will make you richer than your wildest dreams. For FY2007, producers like ZFX and KZL will have margins >us$2/lb on average IMO, and their net profits will be 2.5billion and 200million respectively. As for CBH, which is now profitable, hartleys 100million NPAT estimate was based on zinc averaging us$1.50/lb. Of course any sort of correction should be used as a top up opportunity, well thats my plan anyway. How long before we hit us$2/lb? I reckon before the end of the year, and after that these current prices will seem like a bargain to the smelters.




yeah thats true, btw what do u think of PEM?

thx

MS


----------



## nizar

michael_selway said:
			
		

> yeah thats true, btw what do u think of PEM?
> 
> thx
> 
> MS




Though they do alot of zinc, they are a bit too diversified for me. And quite high cash costs i think its us$0.60+ per lb of zinc.

Solid management, overseas backing and will see substantial earnings growth in the years to some. THeir recent announcement regarding broken hill expansion was very bullish.

But i dont hold this one, and i think zinc pure plays such as CBH and KZL and ZFX will outperform it.

Disc: i own some KZL and CBH


----------



## Brasidas

Zinc certainly is hot.  There is a good discussion of the next "nickel" sector - zinc - in this week's Minesite weekly roundup which is here in full.

That Was The Week That Was … In Australia 

By Our Man In Oz

Minews. Good morning Australia, another week, another record?

Oz. It certainly was for some stocks, especially those selling zinc and nickel to the steel industry. You probably saw the same reports we did down this way, that the world has almost run out of zinc, and the nickel price is showing no sign of retreating from its astonishingly high levels. The end result, naturally, is that zinc stocks such as Zinifex (ZFX), Perilya (PEM), CBH (CBH), Kagara (KZL) and Terramin (TZN) have moved into the stratosphere, joining the nickel brigade who where already up there.

Minews. A few price examples please?

Oz. Zinifex hit a 12-month high of A$15.05 during Friday trade, before settling back to close the week at A$14.65, a gain of A$1.14 (8.4 per cent), Perilya was up A70 cents (20.8 per cent) to A$4.05, down a fraction on its 12-month high of A$4.10 reached on Thursday and Friday. Kagara also set a 12-month high on Friday of A$7.34, before easing back to A$7.21, still up A82 cents (12.8 per cent). CBH, which received a severe setback at this time last year with a stope collapse in its Endeavour mine, was up A5.5 cents (8.8 per cent) to A67.5 cents, also a modest retreat from its high of A73.5 cents set on Thursday. Terramin, which is developing a small zinc mine close to Adelaide in South Australia, was up A14 cents (8.9 per cent) to A$1.70, down from a Thursday high of A$1.75.

Minews. And the nickel sector was strong again?

Oz. Yes, but not to the same extent as the zincs. Jubilee (JBM), which held its annual meeting during the week and said takeovers were off its agenda, was up a modest A20 cents (1.6 per cent) to A$12.60, down on its cracking start to the week when the stock hit a 12-month high of A$12.98. Western Areas (WSA) put on A25 cents (7.4 per cent) to close the week at A$3.64, also down from its 12-month high of A$3.79 set on Tuesday, and Minara (MRE) was up A11 cents (2.2 per cent) to A$5.20, which was some distance behind its 12-month high of A$5.55 set last week.

Minews. It looks from those price movements that the nickel sector is awfully close to a peak?

Oz. It would seem that way. It also seems to be the same with a number of the stocks exposed to the bulk end of the market where the future direction of iron ore and coal prices is being questioned. There were no dramatic falls, but the rises were modest, and not helped by a bit of corporate fiddling. Aztec Resources (AZR), which has been struggling with a takeover bid from rival Mt Gibson (MGX), and the sudden discovery of a royalty on its Koolan Island iron ore project, which it forgot to tell everyone about, resumed trading after a period in the sin bin, but hardly inspired. Volume was high on Thursday and Friday but the price only moved between A23 cents and A24 cents. There might be more to come on that royalty fiasco. Aztec’s takeover suitor, Mt Gibson, was treated more harshly, dropping A1.5 cents (2 per cent) to A70.5 cents. At the top end of the iron ore hopefuls, Fortescue Metals (FMG) returned to favour with a A78 cents (8.8 per cent) rise over the week to close at A$9.58.

Minews. And presumably your uranium stocks were hot after the production problems in Canada?

Oz. A strong week for that sector with most stocks trending up. Paladin (PDN) reached a 12-month high on Wednesday of A$6, but then fell away quite sharply to close on Friday at A$5.46, which was still up A54 cents (11 per cent) on the week. Pepinnini (PNN) also set a new high mark, trading up to A75 cents on Friday before easing back to close at A73 cents, still up A5 cents (7.4 per cent) for the week.

Minews. Much on the downside?

Oz. Very little, even the gold sector, which has been a bit of a laggard, managed to deliver some strong performances. Agincourt (AGC) reported good drill results from its Calais prospect near Wiluna and gained another A5 cents (4 per cent) to A$1.25. More importantly, last weeks’ rise took the gain over the past nine trading days to A25 cents (25 per cent). The only fall really worth noting was Consolidated Minerals (CSM) which dropped A10 cents (4.2 per cent) to A$2.30 as the takeover frenzy which gripped the stock earlier in the month seemed to run out of puff.

http://www.minesite.com/storyFull5.php?storySeq=3894


----------



## MiningGuru

Zinc again up today.

It can't belong before it breaks the magical $2 a pound barrier, and then we will see some real surges in the zinc stocks like ZFX, KZL and others!!


----------



## juddy

It never ceases to amaze me that INL is pretty much ignored on this thread. 

Stage 1 starts tomorrow:

"The HZCP’s dredge has been launched on the Hellyer tailings dam, and is now in place. The shore tanks have been water commissioned, and work on the plant refurbishment is complete. S*lurry commissioning of the plant is scheduled for 2 November 2006, with first production of concentrates due in the following two weeks,* at the annualised rate of not less than 65,000 tonnes per annum (approximately *26,000 tonnes per annum contained zinc metal*)."

That is not including the lead and silver production that goes with this stage.

Stage 2: starts in the new year (early as I have it) and then stage 3 the year after.

Funding from these two stages will come from cashflow from stage 1. The technology is there. Hellyer Mill and the Burnie Demo Plant are built, the infrastructure is in place. No exploration required, starting to acquire more eafd (recent announcement) for stage 2.

They own 22% of BSM who are continually throwing up decent announcements.

These fellas are building an empire and yet not a mention in recent times.


----------



## pacer

We realy need to see zinc move in price to gain stratospheric Sp value......been holding ZFX and KZL for the last 3 weeks....awesome SP gains but can see thier SP loosing momentum without the zinc price rising quickly....all the rises on Sp on these two have been good speculation but zinc price is not gaining as fast ....holding still...and enough to pay for the XMAS pressies, and a few parties along the way......

Wouldn't be surprised if zinc hits 2.20 tomorrow.....Guessing that zinc users will be, or already have bought large ammounts for themselves, on speculation(they aren't all dummies).... so I can only speculate that the zinc price may only rise slowly from now on.....untill there is more available in 2007-8....but cannot see any down trend at all.....good time for intra day traders to pinch a bit off the *NEWBIES*....lol...

I could spend all day speculating on the SP and the reasons for it rising/falling....but that's the guts of it from my point of view....and I'm still here!......


----------



## nizar

pacer said:
			
		

> We realy need to see zinc move in price to gain stratospheric Sp value......been holding ZFX and KZL for the last 3 weeks....awesome SP gains but can see thier SP loosing momentum without the zinc price rising quickly....all the rises on Sp on these two have been good speculation but zinc price is not gaining as fast ....holding still...and enough to pay for the XMAS pressies, and a few parties along the way......
> 
> Wouldn't be surprised if zinc hits 2.20 tomorrow.....Guessing that zinc users will be, or already have bought large ammounts for themselves, on speculation(they aren't all dummies).... so I can only speculate that the zinc price may only rise slowly from now on.....untill there is more available in 2007-8....but cannot see any down trend at all.....good time for intra day traders to pinch a bit off the *NEWBIES*....lol...
> 
> I could spend all day speculating on the SP and the reasons for it rising/falling....but that's the guts of it from my point of view....and I'm still here!......




pacer
if you are concerned about short term sp movements instead of the bigger picture, then i suggest you sell and stress less


----------



## imajica

JML is looking bullish lately on solid volume
charging towards $1

MLS - the undervalued dark horse will be rerated soon


----------



## pacer

Don't worry about me old *Nizar*.....I got me a piece of the cake, and the cream is yet to come...*I KNOW THIS MATE!*....but I like to play all sides on a good play like this..... short, med, and long term trading on this one in different packages.......and my opinions have obviously got your knickers in a twist......why don't you elaborate on your own comments against mine, so we can see just how clever you are instead of bailing out with the short digs...honestly I don't mind learning a trick or two....but this last one was a sad attempt at tossing me off the heap.

My opinions have been 'not far off the mark' lately on all posts....down to the wire virtualy....call it luck or call it bull.....but they are an opinion and don't bother trying to understand my methods...CAUSE they're mine!

What's yours?....no one liners please!

PS ...trying to help a mate learn to trade less like a gambler...so if you are picking up stress signals from me, that's why...less time for fishing and more here in front of this stupid box!.....lol


----------



## dj_420

i dont think anyone has already posted this article on any thread, 

this was on mineweb





Zinc and lead stocks so low, metal consumption could be constrained
By: Dorothy Kosich
Posted: '01-NOV-06 09:00' GMT  © Mineweb 1997-2006



RENO, NV (Mineweb.com) --Teck Cominco executives Tuesday forecast that world zinc stocks will contain only 11 days of supply by the end of this year, and may sink so low that it could “constrain metals consumption.” 

In a conference call to discuss third-quarter financial results, the Vancouver-based miner also noted that lead LME stocks have declined to only two days of global consumption. 

Mike Agg, Vice President Refining & Metal Sales for Teck Cominco, said the shortage of zinc concentrates is already limiting global metal production, as the globally tight concentrate market continues through 2006 and 2007. As a result, Agg said the deficit will cause the drawdown on zinc stocks to continue and could actually “constrain metals consumption. He noted that only 18 days of total global zinc stocks remained at the end of September. London Metals Exchange stocks have fallen 73% so far this year to only 3.8 days of global consumption, according to Agg. Meanwhile, zinc has hit a record high of $1.95 per pound. 

Agg explained that zinc spot premium prices are rising in most markets, including that “strong demand is outstripping supply” and “a lack of availability [of zinc] in local markets.” Global zinc demand is up 5.5% in the Americas, 5.7% in Europe, and 4.9% in Asia, as of the end of August. 

Meanwhile, although LME stocks of lead rose to 70,000 tonnes during the first half of this year, Agg said the stocks have now declined to the mid-40,000-tonne range. Currently, he estimated LME stocks only contain two days of global lead consumption. In the meantime, the lead price hit the historic high of 75-cents per pound on Tuesday. 

Teck Cominco Manager of Market Research Andy Roebuck forecast a deficit in the copper concentrate market for the remainder of this year and in 2007. Since available stockpiles are still low, Roebuck suggested restocking of copper concentrates could continue well into next year. He estimated that 129,000 tonnes of copper remain in LME stocks, or 25 days of global consumption, noting that 90% of those stocks are being stored in warehouses in South Korea and Singapore. 

Teck has experienced its own zinc woes as zinc sales at the Alaskan Red Dog mine were 80,000 tonnes lower during the third quarter due to adverse weather conditions, which delayed the start of the shipping season, and further delayed loading and shipment. Teck Cominco President and CEO Don Lindsay said that due to the tight concentrate market and the delays, the company wasn’t able to get enough zinc to market rapidly enough during the third quarter. 

The company also experienced headaches at its Pogo gold project in Alaska as an excavator cut through a power cable, resulting in a fire which damaged a power substation. Power is expected to be fully restored by the end of the year. 

Meanwhile, the company also will take a $9 million charge for “social contributions” to be made by its sahre of the Antamina mine in Peru. The Peruvian Government has been pressuring mining companies to finalize a “voluntary” windfall profits program to pay for local Peruvian social programs. However, Teck Executive Vice President and COO Peter Kukielski told analysts that he doesn’t believe there will be a “fixed royalty” at Antamina, due to a contractual agreement. 

FINANCIAL RESULTS 

CEO Lindsay told analysts that the company will focus on international growth projects, such as the possibility of building a copper smelter at its Highland Valley project, and doesn’t expect to attempt another large acquisition. The company dropped its bid for Inco, and will sell its Inco stock to CVRD. 

The company reported $504 million in net profit or $2.34 per share for the third quarter of this year, compared with a net profit of $405 million or $2 per share for the same quarter a year ago. Year-to-date net earnings were $1.6 billion or $7.48 per share, almost double the net earnings of $835 million ($4.12 per share) during the first nine months of 2005. Despite its failed takeover bid for Inco, the company reported $3.7 billion in cash and cash equivalents at the end of September


----------



## scsl

I think you zinc bulls are going to looove this article. Just listen to the author... he's so passionate. To say this guy's bullish on zinc and nickel (and other base metals) is a big understatement.

http://news.goldseek.com/AlfField/1162397100.php
1 November 2006


----------



## CanOz

Awesome!!!! Everyone in this forum thats into resource stocks should read that.

Many thanks,


----------



## dj_420

yeah that makes for a good read

he is certainly a fan of the super cycle theory.


----------



## brerwallabi

The lowest end-of-week LME zinc inventory levels in the past 15 years is this week’s 102,975 tonnes. In the past 8 weeks the average weekly drawdown on zinc inventories has been about 7,500 tonnes. If that rate is maintained LME zinc inventories will be exhausted in 14 weeks.
In the current TC/RC negotiations analysts consider that there is potential for the treatment charge to double from USD128/t to near USD250/t (of concentrate), but the price participation basis could increase from USD1,400/t (Zn) to within the range USD2,500/t to USD3,400/t. it is early in the negotiations, there is a concentrate shortage, demand for metal is strong and
stockpiles are decreasing. These negotiations are likely to be extended, not short.
Holding on to PEM and KZL, took part profits CBH.

Its never been so good.


----------



## michael_selway

brerwallabi said:
			
		

> The lowest end-of-week LME zinc inventory levels in the past 15 years is this week’s 102,975 tonnes. In the past 8 weeks the average weekly drawdown on zinc inventories has been about 7,500 tonnes. If that rate is maintained LME zinc inventories will be exhausted in 14 weeks.
> In the current TC/RC negotiations analysts consider that there is potential for the treatment charge to double from USD128/t to near USD250/t (of concentrate), but the price participation basis could increase from USD1,400/t (Zn) to within the range USD2,500/t to USD3,400/t. it is early in the negotiations, there is a concentrate shortage, demand for metal is strong and
> stockpiles are decreasing. These negotiations are likely to be extended, not short.
> Holding on to PEM and KZL, took part profits CBH.
> 
> Its never been so good.




Dude you have to keep an eye "on warrant", so you know if teh tide changes

http://www.basemetals.com/stocks.aspx

Btw do you know what was the lowest LME zinc inventories ever?

thx

MS


----------



## rederob

michael_selway said:
			
		

> Dude you have to keep an eye "on warrant", so you know if the tide changes
> 
> http://www.basemetals.com/stocks.aspx
> 
> Btw do you know what was the lowest LME zinc inventories ever?
> 
> thx
> 
> MS



MS
Brother wallaby has made important points and we should heed them.
We really need next week to look for "cancellations" as there is enough in cancelled warrants to sustain drawdowns to 85k tonnes at moment.
Next week will see zinc's 100k headline figure breached, and its psychological impact will be huge.
As for lowest ever zinc inventory, go back to scratch (1991) as there is nothing within recent times showing such tightness.
Just as copper went into orbit before falling from the sky in May, we are seeing zinc on a similar trajectory now.


----------



## nizar

rederob said:
			
		

> MS
> Brother wallaby has made important points and we should heed them.
> We really need next week to look for "cancellations" as there is enough in cancelled warrants to sustain drawdowns to 85k tonnes at moment.
> Next week will see zinc's 100k headline figure breached, and its psychological impact will be huge.
> As for lowest ever zinc inventory, go back to scratch (1991) as there is nothing within recent times showing such tightness.
> Just as copper went into orbit before falling from the sky in May, we are seeing zinc on a similar trajectory now.




copper stocks reached ~115ktonnes when the price was us$4.07 (intraday) in May. At the beginning of the year they were sitting on about 80ktonnes. So from January to May, the stocks rose sharply as did the price. Copper, at least at the time was trading not on fundamentals but on speculation from traders and hedge funds.

with zinc, its a whole different ball game. Not sharp increases, but slow and steady, as the price rise coincides with the drop in stocks. But u know what they say, slow and steady wins the race. Remember daily consumption is 29-35ktonnes per day.

that said, i wouldnt be suprised if some hedge funds were accumulating zinc from a while ago and they will dump when it hits $2+. But this impact will be unnoticed looking at the longer term picture. What do u think about this rederob? a probable situation that hedge funds are accumulating now to dump later? surely it cant just be smelters doing all the buying? and that would also explain why we are having larger drawdown rates of zinc now compared to say, a few months ago.


----------



## brerwallabi

nizar said:
			
		

> copper stocks reached ~115ktonnes when the price was us$4.07 (intraday) in May. At the beginning of the year they were sitting on about 80ktonnes. So from January to May, the stocks rose sharply as did the price. Copper, at least at the time was trading not on fundamentals but on speculation from traders and hedge funds.
> 
> with zinc, its a whole different ball game. Not sharp increases, but slow and steady, as the price rise coincides with the drop in stocks. But u know what they say, slow and steady wins the race. Remember daily consumption is 29-35ktonnes per day.
> 
> that said, i wouldnt be suprised if some hedge funds were accumulating zinc from a while ago and they will dump when it hits $2+. But this impact will be unnoticed looking at the longer term picture. What do u think about this rederob? a probable situation that hedge funds are accumulating now to dump later? surely it cant just be smelters doing all the buying? and that would also explain why we are having larger drawdown rates of zinc now compared to say, a few months ago.




From what I read far from pushing prices above their fundamental level, hedge funds have been "shorting" copper all through 2006, leaving themselves with a alarming overhang that will have to be covered at some point by buying the stuff.
Nizar are you suggesting speculative purchases of zinc by hedge funds has been happening, if it is the case the hyper growth of China is not going to stop and the demand for zinc is such that any "dumping" will soon be absorbed in the scramble for the stuff.
300 hundred million Chinese peasants are heading for towns the demand will not cease, scarcity value will raise the price of zinc to beyond US$2lb


----------



## rederob

brerwallabi said:
			
		

> From what I read far from pushing prices above their fundamental level, hedge funds have been "shorting" copper all through 2006, leaving themselves with a alarming overhang that will have to be covered at some point by buying the stuff.
> Nizar are you suggesting speculative purchases of zinc by hedge funds has been happening, if it is the case the hyper growth of China is not going to stop and the demand for zinc is such that any "dumping" will soon be absorbed in the scramble for the stuff.
> 300 hundred million Chinese peasants are heading for towns the demand will not cease, scarcity value will raise the price of zinc to beyond US$2lb



Very true brother wallaby.
Although copper inventories are high by recent standards, they are incredibly low by historical standards.
The US housing slowdown has fed more metal into LME exchanges and European destinations are also getting some inflows.  However, most LME copper is in Asian locations, and the reason is attributed to Chinese destocking, plus SRB releases from reserves. 
Note that Shanghai copper exchanges have declined over the past month or so, suggesting it's still more profitable to export than deliver locally.
The analysts reckon copper is about to have its day of reckoning, and they see price upside.
Right now the jury is out.


----------



## nizar

brerwallabi said:
			
		

> From what I read far from pushing prices above their fundamental level, hedge funds have been "shorting" copper all through 2006, leaving themselves with a alarming overhang that will have to be covered at some point by buying the stuff.
> Nizar are you suggesting speculative purchases of zinc by hedge funds has been happening, if it is the case the hyper growth of China is not going to stop and the demand for zinc is such that any "dumping" will soon be absorbed in the scramble for the stuff.
> 300 hundred million Chinese peasants are heading for towns the demand will not cease, scarcity value will raise the price of zinc to beyond US$2lb





hedge funds were long copper for a long time, then in May, just when the masses were entering, they went short, and it collapsed.

if hedge funds were "shorting" copper all through 2006, then tell me why did the price almost double in those 5 months?


----------



## brerwallabi

nizar said:
			
		

> hedge funds were long copper for a long time, then in May, just when the masses were entering, they went short, and it collapsed.
> 
> if hedge funds were "shorting" copper all through 2006, then tell me why did the price almost double in those 5 months?




I was just reading the Daily Telegraph (UK) earlier, its not my statement by the view of one Ambrose Evans-Pritchard.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/10/02/ccview02.xml


----------



## Brasidas

We might be due a breather in zinc related stocks.  The moderator is trying to block my posts to a good site but here is what www minesite com has to say about some current stocks in tis weekely roundup

Oz. Very much so. Zinc is red hot, nickel not much cooler, and then we have renewed interest in the energy sector with coal stocks making an impressive return, and uranium stocks warming up as we head towards the big political showdown in April when both the government and opposition are likely to fall into line with pro-uranium policies. Capping off a remarkable week we had tremendous success from a couple of new floats, and waiting in the wings are about 16 more mining floats ready to list.

Minews. That is very interesting as  AIM floats  are down to a trickle, or even less. We might have a look later at who’s in your new float queue, but first a few prices, please?

Oz. You can’t go past the zinc producers, thanks to continued speculation that the world is close to running out of the stuff. Zinifex (ZFX), Perilya (PEM), CBH (CBH) and Kagara (KZL) all reached new 12-month highs during the week. Zinifex traded up to A$15.89 during Friday trade before easing to close the week at $15.88, a gain of A$1.23, or 8.4 per cent. What makes the latest price more noteworthy is that at this time last time Zinifex was trading at A$5.07, meaning the stock has risen by A$10.81 or 213 per cent in 12-months.

Kagara closed at A$7.24 after reaching its 12-month peak of A$7.81 on Tuesday. The gain for week was a modest A3 cents, and perhaps a pointer to the top of the market being close. The high for CBH was A78 cents on Friday, before a slip at the close to A76 cents, a gain of A8.5 cents (12.6 per cent), and Perilya reached its new high of A$4.66 on Wednesday, and closed the week at A$4.62, up A57 cents (14.2 per cent).

Minews. Spectacular moves.

Oz. True, but a small anecdote to make the point that the top is close. Over lunch during the week a friend of ours told the story of a big Perilya investor who is sitting on more than A$50 million worth of shares, but is waiting until they get to A$5 before he buys himself a new boat, and we’re not talking about a small boat.

Minews. So, the boys are starting to celebrate, and think about cashing out?

Oz. It would be hard not to wouldn’t it. Now, back to the prices because zinc, and boys with boats, was not the only story of last week.


----------



## MalteseBull

Zinc  	November 03,13:00
Bid/Ask 	1.9482 	- 	1.9573
Change 	+0.0225 		+1.17%
Low/High 	1.9075 	- 	1.9574

_______________

looks like CBH, KZL, TZN, ZFX, PEM, FXR are all looking for another sprint today


----------



## nizar

zinc spot upto us$1.98/lb.
touched to us$1.9981/lb.

should be interesting once us$2/lb is smashed, and it will be, just a matter of time.


----------



## YOUNG_TRADER

Zinc November 06,06:57 
Bid/Ask 1.9754 - 1.9845 
Change +0.0272  +1.40% 
Low/High 1.9391 - *2.0004 *


----------



## pacer

Let the smashing begin!!!!!!


----------



## x2rider

well Pacer it is finally there 
Up 3% over night and has broken through the $2.00 barrier . Don't really know where it goes from here but the inventories are still dropping so I suppose it's up 

 A pity you can't trade the metal directly 
 Cheers martin


----------



## nizar

x2rider said:
			
		

> well Pacer it is finally there
> Up 3% over night and has broken through the $2.00 barrier . Don't really know where it goes from here but the inventories are still dropping so I suppose it's up
> 
> A pity you can't trade the metal directly
> Cheers martin




stocks give better exposure in my opinion.


----------



## MalteseBull

up 3% overnight on the LME


----------



## Sean K

MalteseBull said:
			
		

> up 3% overnight on the LME




It's going to be another happy day for overweight Zinc holders.    Might see some profit taking this afternoon, so people can have a bet on the cup.   There's a lot of paper gains out there with these little Zincers that have doubled over the past 2 months.......


----------



## toc_bat

hi all

how does one find information like this : "CBH is totally unhedged."

out?

bye all

j


----------



## YOUNG_TRADER

Zinc November 06,13:32 
*Bid/Ask 2.0086 - 2.0222 * 
Change +0.0604  +3.10% 
Low/High 1.9391 - 2.0222 


LME Warehouse Stocks 03 Nov 2006 
 Close In Out +/- On Warrant Cancelled 

Zinc  *  102975 * 0 1600 -1600 85950 17025 


2 More days of draw downs ought to do it!


----------



## nizar

toc_bat said:
			
		

> hi all
> 
> how does one find information like this : "CBH is totally unhedged."
> 
> out?
> 
> bye all
> 
> j





have a look at the recent quarterly


----------



## toc_bat

thanks for tolerating my silly questions, 

and thanks for a super forum, discussions are always very interesting regardles of topic,

bye nizar


----------



## x2rider

Geez,

 Zinc seems to be going up by a dollar an hour at the moment . Tomorrow should see the breaking of the 100k stocks barrier so that should give it another lift 

 Cheers martin


----------



## alankew

YT or Nizar,what happens to Zinc at 100,000-I know the like of ZFX will go up but is it just like a share overcoming an upper resistant level and from then its blue sky or is it just a physcological barrier


----------



## stoxclimber

Zinc  	99550  	-1800

Now, the countdown to 50,000!

At these rates, it's about 6 weeks - but sooner or later we're going to see more ins like nickel..


----------



## chops_a_must

I know a few manufacturers here in Perth are actually selling back their stocks of zinc, because they can make more doing that then actually selling the products they would have made out of it. It's crazy.


----------



## michael_selway

stoxclimber said:
			
		

> Zinc  	99550  	-1800




where did you get that from?

thx

MS


----------



## chops_a_must

michael_selway said:
			
		

> where did you get that from?
> 
> thx
> 
> MS




I'd say Kitco.com


----------



## stoxclimber

michael_selway said:
			
		

> where did you get that from?
> 
> thx
> 
> MS




yeah kitco (www.kitcometals.com)


----------



## alankew

Anyone else answer my question about when zinc gets to 100k


----------



## sleeper88

alankew said:
			
		

> Anyone else answer my question about when zinc gets to 100k




Bid/Ask 2.0449 - 2.0494 
Zinc 99550 -1800

well personally i think it’s more of a psychological  barrier than anything, but breaking the 100k barrier only means one thing, zinc stocks going through the roof


----------



## alankew

Sleeper thanks for the reply


----------



## pacer

Well thats two resistance points blown at the same time!....$2/lb and the 100,000 LME mark....(kitco.com for those who don't know...awesome site)

I don't need much convincing to hold my zinc stocks ATM.....What a ride!


----------



## bvbfan

Kitco is a terrible site for getting correct prices, I use comdirect which gives me the accual price not something that could be right like kitco half the time.

If you look at copper the price has been out of whack for a few days from what I can gather

The inventory data is the only thing of use on kitco (base metals site)


----------



## comptec

this may be the reason to all these price hike

http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=31275&sid=10754417&con_type=1

check it out

I hope it is not, I want more profit from all these high spot price


----------



## pacer

Nah.....they are just taking advantage on overseas markets...they are still gonna be short of zinc themselves shortly...construction in China ATM is massive....see you at $20+ ZFX......ect....


----------



## alankew

BVB do you have the link for comdirect,is it free.Thanks


----------



## chops_a_must

comptec said:
			
		

> this may be the reason to all these price hike
> 
> http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=31275&sid=10754417&con_type=1
> 
> check it out
> 
> I hope it is not, I want more profit from all these high spot price




It'll be interesting to see what happens to the price over the next few days because of this.


----------



## juddy

chops_a_must said:
			
		

> It'll be interesting to see what happens to the price over the next few days because of this.





Sounds like a bit of Chinese propaganda to me.


----------



## chops_a_must

There is another article that says that Chinese demand will much outstrip supply:

http://www.bloomberg.com/apps/news?pid=20602013&sid=amI0XqdgGhgE&refer=commodity_futures

Who to believe?


----------



## bvbfan

Comdirect sorry is now known as Selftrade 

Zinc is here

They also have nickel, gold and silver
Copper is there by month so you need to keep changing the code

I have a file that pulls the Zinc, Gold and Silver price every 30secs or so if you want to use it instead. Oh the size will be huge since its designed for 1920x1200 screen
Ask and I will post a link to it


----------



## alankew

Thanks for the link


----------



## scsl

bvbfan said:
			
		

> Kitco is a terrible site for getting correct prices, I use comdirect which gives me the accual price not something that could be right like kitco half the time.
> 
> If you look at copper the price has been out of whack for a few days from what I can gather
> 
> The inventory data is the only thing of use on kitco (base metals site)



One thing Kitco is good for is definately the news articles, reports etc.

Here's another great one on zinc! $5,000 here we come!!
http://www.bloomberg.com/apps/news?pid=20601012&sid=aSL8jogoCEdQ&refer=commodities


----------



## Fab

This sounds like a very bullish article on zinc nevertheless zinc appears to be down almost 2% at the moment.


----------



## toc_bat

i know little about trading futures contracts, but it seems to me it ought to be easier to trade the metal itself rather than the producers of the metal. right? wrong? i mean if say one truly beleives the commodity will rise then why not trade it, instead when trading zinc producers shares there is the extra complication of which producer to choose from. 

in a nutshell the futures trader only has to be an expert on the one metal but the share trader has to be an expert on a myriad of companies digging up that metal.

rigth? wrong? what are your thoughts on my beginners naive, or not so perhaps, opinion?

bye all


----------



## wayneL

toc_bat said:
			
		

> i know little about trading futures contracts, but it seems to me it ought to be easier to trade the metal itself rather than the producers of the metal. right? wrong? i mean if say one truly beleives the commodity will rise then why not trade it, instead when trading zinc producers shares there is the extra complication of which producer to choose from.
> 
> in a nutshell the futures trader only has to be an expert on the one metal but the share trader has to be an expert on a myriad of companies digging up that metal.
> 
> rigth? wrong? what are your thoughts on my beginners naive, or not so perhaps, opinion?
> 
> bye all




Well toc, you are right and you are wrong.

Right in that it would be a good idea to just trade the metal, but wrong because there is no viable zinc contract for the retail trader. 

Copper, Gold, aluminium, platinum, silver, palladium.... yes

Zinc, Nickel, lead...nope

Cheers


----------



## toc_bat

wayne

well there you go, i should have done some research before hitting the keyboard, thanks for correcting me, 

bye


----------



## Sean K

Fab said:
			
		

> This sounds like a very bullish article on zinc nevertheless zinc appears to be down almost 2% at the moment.




I find Kitco and Bulliondesk to be both biased towards commods and PMs. Need to read more widely to get a more rounded view I think. There will be negative articles, but they somehow get a positive spin in there somewhere. Just my perception.


----------



## nizar

Fab said:
			
		

> This sounds like a very bullish article on zinc nevertheless zinc appears to be down almost 2% at the moment.




who cares, its more than doubled this year.
if u understand the markets u would understand that nothing goes up in a straight line forever.


----------



## Fab

Nizar,

I huess my point was more than there is still a strong shortage of ZINC and the price of Zinc is going down which I was not really expecting at this stage.


----------



## Sean K

Fab said:
			
		

> Nizar,
> 
> I huess my point was more than there is still a strong shortage of ZINC and the price of Zinc is going down which I was not really expecting at this stage.



Yeah Fab, I thought that was a bit weird too. Even more zinc out of the shed, yet price goes down. Must be many other factors driving it. The fundamentals are still well and truely there for POZ to continue higher into the new year. Perhaps it's just the perception that the price needs to have a breather which takes it down. Profit takers locking in gains too.


----------



## chops_a_must

kennas said:
			
		

> I find Kitco and Bulliondesk to be both biased towards commods and PMs. Need to read more widely to get a more rounded view I think. There will be negative articles, but they somehow get a positive spin in there somewhere. Just my perception.




Any other sites you can recommend that don't have a bias?


----------



## Sean K

chops_a_must said:
			
		

> Any other sites you can recommend that don't have a bias?




Chops, just the general finance sites I suppose. Reuters and the business pages. 

I do like reading Kitco though, when I have any doubts about the stronger for longer, it always cheers me up. 

Nice avatar by the way.


----------



## chops_a_must

bvbfan said:
			
		

> Comdirect sorry is now known as Selftrade
> 
> Zinc is here
> 
> They also have nickel, gold and silver
> Copper is there by month so you need to keep changing the code
> 
> I have a file that pulls the Zinc, Gold and Silver price every 30secs or so if you want to use it instead. Oh the size will be huge since its designed for 1920x1200 screen
> Ask and I will post a link to it




I'm having trouble finding the other metals. Any chance someone can put up a link or give me directions? 

Cheers.


----------



## YOUNG_TRADER

Just under 2 months to go till the end of 2006, will Zinc live up to the title I gave this thread? 

Will it be 'The metal for 2006'? 

Nickel seems to be a clear winner so far, but if Zinc gets to $5k/t then I think on a % basis Zinc would be the winner,

C'mon zinc your on the home straight now!


----------



## x2rider

just a quesion 

 With the stocks falling at a rate of about 2000t per day . It will take about 50days for the stock at the LME to be gone . 
What happens then . If the exchange doesn't have the stock what happens. Do the produces just stockpile or does it get sourced from other areas therefore paying ,no doubt ,a higher price ?

 Cheers Martin


----------



## Fab

It should be a much better day than yesterday for resources today based on the LME performance overnight


----------



## MalteseBull

Fab said:
			
		

> It should be a much better day than yesterday for resources today based on the LME performance overnight




yes

ZINC:
Bid/Ask  	2.0695  	-  	2.0718
Change 	+0.0409 		+2.02%
Low/High 	2.0218 	- 	2.0877


should see some potential shine from KZL, CBH, ZFX, TZN


----------



## chops_a_must

Anyone got any news as to why zinc is getting trounced?


----------



## nizar

chops_a_must said:
			
		

> Anyone got any news as to why zinc is getting trounced?




If you understand how the markets works then you would understand that nothing goes up in a straight line forever. At some points, people actually do lock in profits.

ZInc metal has more than doubled this year, and i wouldn't define 1.8% as "trounced".


----------



## chops_a_must

It's down more than 3% on the one I'm using...


----------



## stoxclimber

4% at the moment. Looks like it might be a bad day for zinc on the ASX on monday


----------



## specman

stoxclimber said:
			
		

> 4% at the moment. Looks like it might be a bad day for zinc on the ASX on monday




I hope so.It will be a good buying opportunity.

I think zinc is headed for a bubble.Years of underinvestment in zinc mines means it will be a while before supply catches up with demand.Also demand for zinc is inelastic compared to copper.

There are substitutes for copper if prices get too high.There are no substitutes for zinc and steel has to be galvanised.Structures made from galvanised steel last 5 times longer.

Throw in the fact that zinc only accounts for 7% of galvanised steel means that high zinc prices can be somewhat absorbed.Current high zinc prices have not had an impact on demand.Zinc prices will need to go higher to curb demand otherwise inventories will be zero in about 90 days.

We have a bubble situation looming.


----------



## Fab

Kitco says -4.01 % overnight but commsec commodities says +0.58%. Can anyone tell me how often these 2 indicators are refreshed


----------



## rederob

Fab said:
			
		

> Kitco says -4.01 % overnight but commsec commodities says +0.58%. Can anyone tell me how often these 2 indicators are refreshed



Yes
The sites themselves tell you, if you care to read from them.
Clearly if you are looking at a site that updates instantaneously on logging in (eg Kitco) it will be current info, but probably a time delayed feed.
I am not aware of (nor have looked for) live information from Comsec.


----------



## noirua

specman said:
			
		

> I hope so.It will be a good buying opportunity.
> 
> I think zinc is headed for a bubble.Years of underinvestment in zinc mines means it will be a while before supply catches up with demand.Also demand for zinc is inelastic compared to copper.
> 
> There are substitutes for copper if prices get too high.There are no substitutes for zinc and steel has to be galvanised.Structures made from galvanised steel last 5 times longer.
> 
> Throw in the fact that zinc only accounts for 7% of galvanised steel means that high zinc prices can be somewhat absorbed.Current high zinc prices have not had an impact on demand.Zinc prices will need to go higher to curb demand otherwise inventories will be zero in about 90 days.
> 
> We have a bubble situation looming.




There are infact substitutes for Zinc that  become increasingly viable with the present high price. These are cadmium, cobalt; and Yeast and Mammalein Metallothioneins for Yeast Copper Zinc Super-oxide dimutase.


----------



## specman

noirua said:
			
		

> There are infact substitutes for Zinc that  become increasingly viable with the present high price. These are cadmium, cobalt; and Yeast and Mammalein Metallothioneins for Yeast Copper Zinc Super-oxide dimutase.




Can't say I have heard galvanising steel with cadmium and cobalt but I guess it's possible in theory.I thought cadmium and cobalt are highly toxic and a cancer causing agent.Zinc is not and in fact I take zinc tablets to recover more quickly from colds and flus.

I'm certainly not an expert in the field but how difficult would it be to change the production procedure of the steel manufacturing companies going from hot dipped zinc galvanising to using cadmium or cobalt?


----------



## noirua

specman said:
			
		

> Can't say I have heard galvanising steel with cadmium and cobalt but I guess it's possible in theory.I thought cadmium and cobalt are highly toxic and a cancer causing agent.Zinc is not and in fact I take zinc tablets to recover more quickly from colds and flus.
> 
> I'm certainly not an expert in the field but how difficult would it be to change the production procedure of the steel manufacturing companies going from hot dipped zinc galvanising to using cadmium or cobalt?





You are quite right about the toxic nature of the electroplating of steel with cadmium. This in itself is not a new process and is fairly widespread in the United States and has excellent adhesion qualities. In some countries where the toxic process does not matter there has been an increase in its use this year ( mainly China and India ), albeit for use mainly in batteries: http://www.who.int/ifcs/documents/forums/forum5/hm_agarwal.pdf 

The following link covers cadmium processing:  http://www.enthone.com/resources_detail.aspx?Page=cad.ascx


----------



## YOUNG_TRADER

All this fuss,

Zinc's previous resistance was $1.80, so it only makes sense that this should become new level of support, thus Zinc should march higher as it has and then fall back to this support level, consolidate and then move on higher


LME Warehouse Stocks 10 Nov 2006 
          Close In Out     +/- On Warrant Cancelled 

Zinc    95250 0 1550 -1550 82750 12500 


See the figures? Zinc is loosing 1500t's a day! 

I'm fully cashed up so I am looking for a good pullback to load up again, but that doesn't mean I'm going to scream the sky is falling because Zinc moves back to a support level, 

If your concerned about a pullback (which IMO is overdue for the whole mkt) cash up and move to the sidelines and wait like I am


----------



## michael_selway

stoxclimber said:
			
		

> 4% at the moment. Looks like it might be a bad day for zinc on the ASX on monday




I have a feeling it might not go down that much

Because you should keep and eye on "on warrant" and "ins"

http://www.basemetals.com/stocks.aspx







thx

MS


----------



## noirua

YOUNG_TRADER said:
			
		

> All this fuss,
> 
> Zinc's previous resistance was $1.80, so it only makes sense that this should become new level of support, thus Zinc should march higher as it has and then fall back to this support level, consolidate and then move on higher
> 
> 
> LME Warehouse Stocks 10 Nov 2006
> Close In Out     +/- On Warrant Cancelled
> 
> Zinc    95250 0 1550 -1550 82750 12500
> 
> 
> See the figures? Zinc is loosing 1500t's a day!
> 
> I'm fully cashed up so I am looking for a good pullback to load up again, but that doesn't mean I'm going to scream the sky is falling because Zinc moves back to a support level,
> 
> If your concerned about a pullback (which IMO is overdue for the whole mkt) cash up and move to the sidelines and wait like I am




Hi Y_T et al, the following, although written on 17th October, seems to sum up the position of Zinc admirably:  http://www.mining-journal.com/wms_magazine/wms_Mag_Breaking_News.aspx?breaking_news_article_id=873

???? Does this mean you have sold all your URANIUM stocks etc.,  Y_T. ????


----------



## nizar

michael_selway said:
			
		

> I have a feeling it might not go down that much
> 
> Because you should keep and eye on "on warrant" and "ins"
> 
> http://www.basemetals.com/stocks.aspx
> 
> 
> 
> 
> 
> 
> thx
> 
> MS




MS
stocks move with the zinc price, regardless of movements in supplies

Stocks were still going down in May-June - but zinc stocks went south because the zinc spot price wasnt moving


----------



## CanOz

YOUNG_TRADER said:
			
		

> If your concerned about a pullback (which IMO is overdue for the whole mkt) cash up and move to the sidelines and wait like I am




Good idea!


----------



## michael_selway

nizar said:
			
		

> MS
> stocks move with the zinc price, regardless of movements in supplies
> 
> Stocks were still going down in May-June - but zinc stocks went south because the zinc spot price wasnt moving




well corrections can happen yes

but the big picture is more important i.e. no "ins" and "on warrant" dropping

thx

MS


----------



## rederob

michael_selway said:
			
		

> I have a feeling it might not go down that much
> Because you should keep and eye on "on warrant" and "ins"
> thx
> MS



Not quite, MS.
The driving force of a base metal's fundamentals is always its rate of drawdown: This can best be noted through the volume of stock cancelled as a percentage of total stock. 
Typically when this rises above 10 percent, a metal's fundamentals tighten and we need inflows in oder to move back to "balance". 
Balance is typically where cancellations are around 5% of total stock.


----------



## specman

noirua said:
			
		

> You are quite right about the toxic nature of the electroplating of steel with cadmium. This in itself is not a new process and is fairly widespread in the United States and has excellent adhesion qualities. In some countries where the toxic process does not matter there has been an increase in its use this year ( mainly China and India ), albeit for use mainly in batteries: http://www.who.int/ifcs/documents/forums/forum5/hm_agarwal.pdf
> 
> The following link covers cadmium processing:  http://www.enthone.com/resources_detail.aspx?Page=cad.ascx



It would seem looking at those links that using cadmium is not a cheap process so it's a moot point.

I should have said that there are no economically viable substitutes for zinc in galvanized steel.Perhaps aluminium could be used but I'm not sure how adhesive that would be .

Substituting copper pipes with pvc is very straight forward and economical but finding a substitute for zinc would not be as easy.


----------



## specman

rederob said:
			
		

> Not quite, MS.
> The driving force of a base metal's fundamentals is always its rate of drawdown: This can best be noted through the volume of stock cancelled as a percentage of total stock.
> Typically when this rises above 10 percent, a metal's fundamentals tighten and we need inflows in oder to move back to "balance".
> Balance is typically where cancellations are around 5% of total stock.




Cancellations in zinc has decreased since the sudden spike in zinc prices but this may be due to the fact buyers are holding off waiting for prices to come down a little and not because of a decrease in demand.


----------



## YOUNG_TRADER

noirua said:
			
		

> ???? Does this mean you have sold all your URANIUM stocks etc.,  Y_T. ????




All gone except GBE which I actually bought only last week as it was the only U-Stock to have not run and was sitting at 6month lows, ran a bit on Friday before trading halt, be interesting to see what's going on.

But as I said I'm expceting a correction so I took profits everywhere.


----------



## noirua

YOUNG_TRADER said:
			
		

> All gone except GBE which I actually bought only last week as it was the only U-Stock to have not run and was sitting at 6month lows, ran a bit on Friday before trading halt, be interesting to see what's going on,
> 
> 
> But as I said I'm expceting a correction so I took profits everywhere




Well done! If you carry on in this fashion you have to become very rich at some stage, not many manage to sell everything. One quite rich person was asked why he had not made an absolute fortune, he said " because I failed to take my own advice" - there is quite a lot in that for us all to contemplate.


----------



## Sean K

I reckon there'll be a good buying opp in Zn stocks shortly, if not tomorrow. The supply demand equation seems like it's going to remain short term at least (into 07 by most analysist that I've read) so might be good to buy on dips. I'm still on CBH (not much) and will probably top up when we have a decent pull back. 

Anyone think think the zinc shortfall is going to change shortly? Or best we keep focussed on it for a while? Is there a zinc bear out there?


----------



## Fab

If I take ZFX performance at the end of this week it pull back on thursday to gain everything back and more on friday so I think we are likely to see this type of volatilty again in the near future as people get nervous about record high price.
The fundamentals of some commodities such as ZINC appears that there is not enough of it which has to benefit company such as ZFX which still very very cheap on P/E ratio.
Any pull back will be a good buying opportunity in my opinion


----------



## nizar

kennas said:
			
		

> I reckon there'll be a good buying opp in Zn stocks shortly, if not tomorrow. The supply demand equation seems like it's going to remain short term at least (into 07 by most analysist that I've read) so might be good to buy on dips. I'm still on CBH (not much) and will probably top up when we have a decent pull back.
> 
> Anyone think think the zinc shortfall is going to change shortly? Or best we keep focussed on it for a while? Is there a zinc bear out there?




im with YT on this.
watch us$1.80/lb as a support level, price should bounce off it.


----------



## imajica

JML will be the quality zinc play over the next year - still under a $1  good value IMO


----------



## pacer

noirua said:
			
		

> Well done! If you carry on in this fashion you have to become very rich at some stage, not many manage to sell everything. One quite rich person was asked why he had not made an absolute fortune, he said




Too  true....convinced myself out of selling my zfx znd kzl on friday....never mind....got some more zfx at 16.10 this morning......stockpiles are still not going up any time soon, and I read an article from the australian saying metals in general are expected to fall in price, but Zinc is expected to rise by 18% over the next 3 months.....so I'm not panicing at all......


----------



## CanOz

If you go to Kitco metals at http://www.kitcometals.com/

and have a look at the price charts compared with supply charts, its interesting to note that the supply of the key metals was dropping even in the May correction. Zinc and Nickel are still in shorter than historical supply.

The lack of demand for these metals in the short term cannot be based on the supply and demand fundementals, only speculation of future demand right? So if this is the case, the price will come back up very shortly, as well as the share prices of the equities that are exposed to them....so this is just a buying opportunity....right?


----------



## stoxclimber

zinc seems to be holding up OK in early trade...


----------



## nizar

CanOz said:
			
		

> If you go to Kitco metals at http://www.kitcometals.com/
> 
> and have a look at the price charts compared with supply charts, its interesting to note that the supply of the key metals was dropping even in the May correction. Zinc and Nickel are still in shorter than historical supply.
> 
> The lack of demand for these metals in the short term cannot be based on the supply and demand fundementals, only speculation of future demand right? *So if this is the case, the price will come back up very shortly*, as well as the share prices of the equities that are exposed to them....so this is just a buying opportunity....right?




Short term can mean longer than ONE DAY.
"Very shortly" in May meant several weeks.


----------



## stoxclimber

Seems to me a lot of traders know that the zinc boom is going to pop one day - and when it does they don't want to be on it. Realistically though, there are no signs that now is the time - stocks keep dropping, theres some supply side issues and the Friday drop is just going to increase demand.

nizar: while it's several weeks until the stock price reaches the previous high - its not like the stocks are going down for several weeks in a row!! In September, i think it was, zinc fell 8-9% in one LME day of trading and zfx hit 10.50 on that day - the low for that period (and since then). So while zinc didn't recover to its previous highs for over a month, was that still a good buying opportunity in hindsight?? What's so different about today (except a smaller zinc fall!)


----------



## stoxclimber

as I post the zinc price drops $75..bad timing


----------



## Sean K

Zn down to 1.96/1.97, but LME stocks under 95K, and continue to slide. Strange anomoly.


----------



## chops_a_must

It looks like lead has got some kind of poisoning as well, getting pumped.


----------



## nizar

kennas said:
			
		

> Zn down to 1.96/1.97, but LME stocks under 95K, and continue to slide. Strange anomoly.




Look at charts in May-June.
Stocks went from 260ktonnes to 230ktonnes but the price went from 1.80 to 1.35.
So "strange anomolys" do happen.

Every bullrun has corrections and we just mite be seeing one now.


----------



## pacer

WOW....you all look at it as down turn...I can only see an upside.....what happened in the past is gonna gonna make you a poorer person, if you trade to the old rules....look to the future....HEHE...anyone got any ZINC?.....Big traders trying to get you to sell before the real big boys try a TAKEOVER....  if you ask me!....

Stuff the graphs when this happens ....I hold still...AVERAGE 12.80....and happy as puke in a toilet...lol...hehehehehehe....gawd I'm a wierdo!

Sorry ..I'm in the middle of gutting a few fish.....and a bourbon....lol...


----------



## chops_a_must

How much of this, "correction" do you think is in anticipation to a possible easing of demand next year? Or do you think the lack of supply in stock makes this irrelevant?


----------



## scsl

Geeez! Zinc has had one crazy night!!

I'm off to bed now, but several times during the night, I'd take a break from my last minute cram (for uni exams) to check the kitco prices. 

In the evening, it was about 1.95, before midnight it was 1.88 and now, it's back above 2.00!


----------



## noirua

Mining stocks have fallen 3% to 6% on the LSE today as commodity prices fall.


----------



## stoxclimber

Zinc stocks only down 350t today - one of the smallest drop off that I can remember (although I remember a week of medicore drop offs). Very likely a result of the recent price rise - so hopefully with the correction we'll see more demand.


----------



## johnmwu3

Some buyers may waiting for the price down more then come to the market to buy Zinc.


----------



## Gundini

Honestly think it is just profit taking, the institutions have made plenty, and are stuffing their Xmas stocking!


----------



## Fab

Zinc up 1.76% overnight . It should be a good day


----------



## specman

Zinc would be a lot higher by now if it were not for the poor performance of copper.The fundamentals for copper is looking very weak and really does not justify it's present price.This is the one bogey that could curse zinc should copper suddenly collapse.Some analysts are doubtful whether other base metals could go higher without the lead of copper.


----------



## Fab

specman said:
			
		

> Zinc would be a lot higher by now if it were not for the poor performance of copper.The fundamentals for copper is looking very weak and really does not justify it's present price.This is the one bogey that could curse zinc should copper suddenly collapse.Some analysts are doubtful whether other base metals could go higher without the lead of copper.



Specman,

Why does copper needs to go higher for zinc to follow ?


----------



## nizar

specman said:
			
		

> Zinc would be a lot higher by now if it were not for the poor performance of copper.The fundamentals for copper is looking very weak and really does not justify it's present price.This is the one bogey that could curse zinc should copper suddenly collapse.Some analysts are doubtful whether other base metals could go higher without the lead of copper.




Specman - Agree. Copper is dragging zinc down the same way that oil is dragging gold down.
Fab - copper is a "barometer of the economy" as some say, so if copper leads the way for other base metals to a certain extent.


----------



## specman

Fab said:
			
		

> Specman,
> 
> Why does copper needs to go higher for zinc to follow ?




I would speculate that the market believes that if the fundamentals can reverse so abruptly for copper then the other base metals could soon follow.

http://www.forbes.com/home/feeds/afx/2006/11/14/afx3172408.html


----------



## Fab

Thanks for the explanation


----------



## MalteseBull

Good time to stock up on CBH, KZL and ZFX?

opinions


----------



## nizar

MalteseBull said:
			
		

> Good time to stock up on CBH, KZL and ZFX?
> 
> opinions




Id rather be buying after the stocks have bottomed out and are on the way up again.
But then you make less profit they say??
Yeh - but less risk of losing money in the short-term as the stocks may keep on falling.


----------



## thecountof

I would just be happy if somone could tell me why AIM has been going through the roof and CBH and ZFX are going down at a rate of knots.


----------



## nizar

thecountof said:
			
		

> I would just be happy if somone could tell me why AIM has been going through the roof and CBH and ZFX are going down at a rate of knots.




Dont try to find explanations.
Rather, protect yourself from the losses.
There doesnt have to be a reason and it doesnt have to make sense. The market can stay irrational longer than you can stay solvent.

AIM wasnt moving much while CBH doubled from 40c to 80c in the last 2 months upto 2 weeks ago.


----------



## YOUNG_TRADER

Simple the fact that ZFX is a big Insto Stock and Instos seem to be existing the mkt (see also BHP RIO WPL all sold down over last few days on large vol)

CBH ran hard from 30c level May Correction to 85c!!!! so its time to move on


AIM hadn't run, so that + lack of other opportunities + traders + momentum and up she went!


----------



## YOUNG_TRADER

nizar said:
			
		

> Dont try to find explanations.
> Rather, protect yourself from the losses.
> There doesnt have to be a reason and it doesnt have to make sense. The market can stay irrational longer than you can stay solvent.




So very good words of wisdom there folks, pay attention to them!


----------



## michael_selway

MalteseBull said:
			
		

> Good time to stock up on CBH, KZL and ZFX?
> 
> opinions




I would say so soon actually

zinc is still $2 a pound, do u believe it!

But yeah if u could pick the bottom that is a bonus

thx

MS


----------



## Sean K

michael_selway said:
			
		

> I would say so soon actually
> 
> zinc is still $2 a pound, do u believe it!
> 
> But yeah if u could pick the bottom that is a bonus
> 
> thx
> 
> MS



You been on holiday MS?


----------



## Kipp

stoxclimber said:
			
		

> Zinc stocks only down 350t today - one of the smallest drop off that I can remember (although I remember a week of medicore drop offs). Very likely a result of the recent price rise - so hopefully with the correction we'll see more demand.



Stox, I think it goes a little bit like this....when Zn is purchased on the LME the buyer doesn't take possession for 3 months.  It just moves from the "on warrant" LME supplies to the "Cancelled", but the overall tonnage of the LME doesn't change.  The actual tonnage of Zn that moves from the LME on a daily basis comes from the cancelled stockpile.  So the decrease of 350t that you are referring to is actually a result of trading 3 months ago, not the current Zinc action.

At the same time, 2000t can leave the LME today without any Zinc getting sold all week (as it is just stock sold 3 months ago)... it's all about the "on warrant" Zinc Stockpiles.  If there os 10k "ON warrant" and 80k cancelled. That is alot more positive than 80k on warrant, 10k cancelled.  This hasn't been the clearest explanation, but I hope you get my meaning...  Rederob, YT- am I close here?


----------



## Kipp

rederob said:
			
		

> MS
> You are a worry!
> The zinc was sold a long time ago.
> What has happened is that warrants have been exercised  - ie cancelled - and buyers have chosen to take delivery of the metal.
> Accordingly, that metal will be moved out of the various warehouses in days/weeks to come, and land in the laps of typical consumers.
> I am still waiting for MS to respond to his "fake buying" claim, made a few days ago: Willbe interested to understand where/how this happens.



Well, here it is in Rederob's own words... when it comes to the metals market you wont find many more cluey on the ASX.


----------



## rederob

Kipp said:
			
		

> Well, here it is in Rederob's own words... when it comes to the metals market you wont find many more cluey on the ASX.



Kipp
You have grasped the idea, although actual time frames can be extremely variable.
Zinc's backwardation has spun out, meaning spot prices are now well above future prices.
Consumers are never keen to enter the spot market while backwardation is increasing as it incrementally ramps up the forward price of metal, and adds significantly to their production costs.
So we are a stage where consumers will try to hold out as long as they can, on the basis that the market will right itself.
Unfortunately, there is no sign on the horizon indicating their prayers will be answered, and they will end up getting back into spot as it continues to tighten.  In turn, they will likely lead to the next major upleg as consumers come to realise it's a mad scramble for whatever is on the the table.  Otherwise their production (and ability to satisfy forward orders/contracts) goes down the gurgler.
Ideally we would prefer (at least I would) a further decline in zinc over coming days, followed by rather slow consolidation foe another week or so.  This may happen if consumers try to fool the market by not buying into it.  We will truly know the market is fooled when there are minimal inflows matched by minimal outflows (you can see this trend presently occurring for nickel).
Should this scenario spin out, the likes of ZFX and KZL can add another 20% in a flash, and new highs will be spectacular (note that exactly a year ago OXR took off and more than doubled in price within 6 months).


----------



## phoenixrising

ManMetals has Zinc

Resistence $4580 m/t

Support....$4000 m/t

Price now..$4070 m/t  (@ time of writing)

http://www.kitcometals.com/reports/manmetals/metals_061115.pdf

Interesting to see if it holds


----------



## stoxclimber

rederob:If your ideal pattern of zinc prices turns out, will we see a spike in KZL/ZFX etc within the next 2 weeks or so of quiet zinc price movements?


----------



## rederob

stoxclimber said:
			
		

> rederob:If your ideal pattern of zinc prices turns out, will we see a spike in KZL/ZFX etc within the next 2 weeks or so of quiet zinc price movements?



stox
Yes.
But what I want and what the market does are usually two different stories.
There is a time to be bullish, and a time to be watchful.
Right now it's "be watchful".
If you are game, it's also a good time to preempt the rise by getting into the zinc equities, but only with a very tight stop.
As an investor, my personal preference is to wait another week and get a clearer picture of trend.
If you took a look at what happened to OXR, you will realise that if this happens to ZFX and brethren, then another week will not be a worry.
If I were talking to you on the street, I would be more forthright. I would say you mad if you didn't have ZFX already, and you would be equally mad for not adding more today.
My madness is exposed by also having around 20% of my portfolio in 2 zinc equities.


----------



## michael_selway

kennas said:
			
		

> You been on holiday MS?




Isnt zinc around $2/lb on 

http://www.kitcometals.com ?

thx

MS


----------



## michael_selway

rederob said:
			
		

> stox
> Yes.
> But what I want and what the market does are usually two different stories.
> There is a time to be bullish, and a time to be watchful.
> Right now it's "be watchful".
> If you are game, it's also a good time to preempt the rise by getting into the zinc equities, but only with a very tight stop.
> As an investor, my personal preference is to wait another week and get a clearer picture of trend.
> If you took a look at what happened to OXR, you will realise that if this happens to ZFX and brethren, then another week will not be a worry.
> If I were talking to you on the street, I would be more forthright. I would say you mad if you didn't have ZFX already, and you would be equally mad for not adding more today.
> My madness is exposed by also having around 20% of my portfolio in 2 zinc equities.




This correction i dont think you need to be watchful imo

you need to keep an eye on "ins' and "on warrant', it hasnt really got worse, its got better imo (for zinc price going up)

http://www.kitcometals.com

thx

MS


----------



## rederob

michael_selway said:
			
		

> This correction i dont think you need to be watchful imo
> 
> you need to keep an eye on "ins' and "on warrant', it hasnt really got worse, its got better imo (for zinc price going up)
> 
> http://www.kitcometals.com
> 
> thx
> 
> MS



I have said elsewhere that I disagree with that idea.
Without cancellations and drawdowns the "tightness" that pushes prices higher disappears somewhat.
The reality is that if you do not look at the totality of factors, you will be blindsided.
I expect zinc to fall away again today, and will personally see if it represents another opportunity to buy the dips: However, as I would not get back into KZL over $6 I suspect a longer wait is ahead.


----------



## Fab

Kitcometal shows that most metals did not move overnight . Is that a mistake ?


----------



## michael_selway

rederob said:
			
		

> I have said elsewhere that I disagree with that idea.
> Without cancellations and drawdowns the "tightness" that pushes prices higher disappears somewhat.
> The reality is that if you do not look at the totality of factors, you will be blindsided.
> I expect zinc to fall away again today, and will personally see if it represents another opportunity to buy the dips: However, as I would not get back into KZL over $6 I suspect a longer wait is ahead.




Red but there has been cancellations as well no "ins"







on warrant is down to 81k atm

thx

MS


----------



## rederob

michael_selway said:
			
		

> Red but there has been cancellations as well no "ins"
> 
> on warrant is down to 81k atm
> 
> thx
> 
> MS



Michael
Please realise that if you work "fundamentally" you have to look to as much information as is practical, and useful.
Cancellations determine that there will be drawdown, and without drawdown the fundamentals cannot tighten.
Lack of inflow might just mean that supply is dormant, which is not a problem if there is no drawdown.
This is because exchange warehouses are traditionally a vestige for excess metal, rather than a first port of call for consumers.
The normal state of metals in warehouses is "contango".  That is, spot prices are lower than forward prices, and the higher future price accounts for the cost of storage.
When this balance changes we are in a backward state to the norm, and we therefore call this "backwardation".
Zinc is in backwardation, and the rate was spinning out until a week ago.
Backwardation draws metal to spot, as any excess can be sold for more than the cost of holding it on inventory (for a rainy day!).
This is a beautiful mechanism to watch, and if you watch it closely enough, you can read a lot more into the market than just the metal flows per se.
The valid point of your observation about "ins" is that that there are few, and of low volume.
Mind you, recently we have seen cancellation rates fizzle, as the spot price rose and consumers walked away from the market.
My point here is that we need to "watch" carefully for signs that consumers have lost their battle and have no option but to purchase from spot.
This is a key point, and the price will quickly pivot and head sharply higher.
My view is that "the game" will last weeks rather than days, so I have a suspicion we might be able to buy into some good zinc equity dips next week.


----------



## CanOz

rederob said:
			
		

> Michael
> Please realise that if you work "fundamentally" you have to look to as much information as is practical, and useful.
> Cancellations determine that there will be drawdown, and without drawdown the fundamentals cannot tighten.
> Lack of inflow might just mean that supply is dormant, which is not a problem if there is no drawdown.
> This is because exchange warehouses are traditionally a vestige for excess metal, rather than a first port of call for consumers.
> The normal state of metals in warehouses is "contango".  That is, spot prices are lower than forward prices, and the higher future price accounts for the cost of storage.
> When this balance changes we are in a backward state to the norm, and we therefore call this "backwardation".
> Zinc is in backwardation, and the rate was spinning out until a week ago.
> Backwardation draws metal to spot, as any excess can be sold for more than the cost of holding it on inventory (for a rainy day!).
> This is a beautiful mechanism to watch, and if you watch it closely enough, you can read a lot more into the market than just the metal flows per se.
> The valid point of your observation about "ins" is that that there are few, and of low volume.
> Mind you, recently we have seen cancellation rates fizzle, as the spot price rose and consumers walked away from the market.
> My point here is that we need to "watch" carefully for signs that consumers have lost their battle and have no option but to purchase from spot.
> This is a key point, and the price will quickly pivot and head sharply higher.
> My view is that "the game" will last weeks rather than days, so I have a suspicion we might be able to buy into some good zinc equity dips next week.





Rederob, is it possible that consumers of the metal actually stock up when it suits them, to try and ride out high spot price increase and this causes these drop in prices while the supply looks slim?


----------



## specman

rederob said:
			
		

> Michael
> Please realise that if you work "fundamentally" you have to look to as much information as is practical, and useful.
> Cancellations determine that there will be drawdown, and without drawdown the fundamentals cannot tighten.
> Lack of inflow might just mean that supply is dormant, which is not a problem if there is no drawdown.
> This is because exchange warehouses are traditionally a vestige for excess metal, rather than a first port of call for consumers.
> The normal state of metals in warehouses is "contango".  That is, spot prices are lower than forward prices, and the higher future price accounts for the cost of storage.
> When this balance changes we are in a backward state to the norm, and we therefore call this "backwardation".
> Zinc is in backwardation, and the rate was spinning out until a week ago.
> Backwardation draws metal to spot, as any excess can be sold for more than the cost of holding it on inventory (for a rainy day!).
> This is a beautiful mechanism to watch, and if you watch it closely enough, you can read a lot more into the market than just the metal flows per se.
> The valid point of your observation about "ins" is that that there are few, and of low volume.
> Mind you, recently we have seen cancellation rates fizzle, as the spot price rose and consumers walked away from the market.
> My point here is that we need to "watch" carefully for signs that consumers have lost their battle and have no option but to purchase from spot.
> This is a key point, and the price will quickly pivot and head sharply higher.
> My view is that "the game" will last weeks rather than days, so I have a suspicion we might be able to buy into some good zinc equity dips next week.



Rederob,some good information there,thanks.

I also agree with you that consumers of zinc will lose their battle and will have to purchase from spot.There simply is no substitute for zinc in galvanizing and with no zinc,production stops.Galvanizing accounts for 70% of zinc use.Die casting is another main use for zinc and i'm not sure there is a cheap substitute for that either.

My only worry is the poor state of copper which will probably drag down other base metals should it collapse.I think the only reason it hasn't dropped more is because the funds are a bit wary of shorting base metals as they have been burnt badly recently,underestimating them.What are your thoughts on this?


----------



## rederob

canuck
Yes, it is possible.
That is why I think the battle has some weeks left.
Typically we now have a number of consumers caught out with their forward order books, going to spot to make ends meet.
We will also have many other consumers drawing down their inventory, continuously, in order to try and ride out the high backwardated price of zinc.
What we should soon see is a dip in zinc prices, followed by a heck of a lot of buying - watch out for a refreshingly high rate of cancellations in order to test this.

specman
I agree that copper will bring zinc down again next week.
But I think that once zinc is below 50k tonnes, it will have disconnected from copper and will run its own race.
I have set aside a few dollars for a final tranche of KZL, but will not pay more than $5.60 which clearly is not yet in range - so be it.  Corrections and consolidation do not happen overnight, and I have almost 10 years before I am going to be able to enjoy my efforts into retirement.


----------



## nizar

rederob said:
			
		

> I have set aside a few dollars for a final tranche of KZL, but will not pay more than $5.60 which clearly is not yet in range - so be it.  Corrections and consolidation do not happen overnight, and I have almost 10 years before I am going to be able to enjoy my efforts into retirement.




What a great shame it will be if it drops to $5.70 and then rebounds.


----------



## toothfairy

So true Nizar, that is the danger if you treat share trading as a science. For me I treat it like an art, not unlike bringing up children. ( i.e. all the rules you set will be broken, at the end of the day some are luckier than the others.)


----------



## stoxclimber

rederob said:
			
		

> I have set aside a few dollars for a final tranche of KZL, but will not pay more than $5.60 which clearly is not yet in range - so be it.  Corrections and consolidation do not happen overnight, and I have almost 10 years before I am going to be able to enjoy my efforts into retirement.





Any particular reason you favour KZL over the other zinc plays, especially ZFX?


----------



## Fab

It will be interesting to see how the zinc producer react on monday as zinc went down quiet strongly but copper went up and the down went up.
I am expecting ZFX to go down but not sure it will be the big type of drop that we have experienced recently.


----------



## rederob

stoxclimber said:
			
		

> Any particular reason you favour KZL over the other zinc plays, especially ZFX?



Strong growth pipeline, already well planned and coming to fruition month by month.
Exceptional prospectivity and aggressive exploration program.
Opportunities through scale to reduce costs and increase profit margins.
Capacity in 2007 to offer dividends through strong excess cash.
Downside - exposure to copper: Upside - generous copper hedging program in 2007 and 2008 guaranteeing excellent returns.


----------



## michael_selway

rederob said:
			
		

> Strong growth pipeline, already well planned and coming to fruition month by month.
> Exceptional prospectivity and aggressive exploration program.
> Opportunities through scale to reduce costs and increase profit margins.
> Capacity in 2007 to offer dividends through strong excess cash.
> Downside - exposure to copper: Upside - generous copper hedging program in 2007 and 2008 guaranteeing excellent returns.




also its got a high PE already comparatively you could add

thx

MS


----------



## Fab

What do you think these 2 companies will do on monday ? It is looking pretty grim to me looking at the big drop in commodity price overnight . Vommodities are currrently becoming very volatille


----------



## rederob

michael_selway said:
			
		

> also its got a high PE already comparatively you could add
> 
> thx
> 
> MS



Thanks MS
I like its PE.
(I don't look at published pes for companies like KZL.  I forecast it likely earnings based on trend continuity.)


----------



## michael_selway

Fab said:
			
		

> What do you think these 2 companies will do on monday ? It is looking pretty grim to me looking at the big drop in commodity price overnight . Vommodities are currrently becoming very volatille




FAB did u buy high?

otherwise dont need to worry

thx

MS


----------



## nizar

rederob said:
			
		

> Thanks MS
> I like its PE.
> (I don't look at published pes for companies like KZL.  I forecast it likely earnings based on trend continuity.)




So do I.
Well explained.
Thank god there is somebody out there who shares this view. Most of the people i speak to say they think KZL is "expensive".
You must look at the future growth in earnings. Id be very happy to pay 15x earnings for a company with 30%pa earnings growth.




			
				michael_selway said:
			
		

> FAB did u buy high?
> 
> otherwise dont need to worry
> 
> thx
> 
> MS




"High" is a relative term. When i first bought KZL at $2.45, some people suggested it was "expensive", after all, 2 months earlier it was $1.50. Now some people are telling me, nice one, u got KZL so cheap. I was like, I did? actually NO i didnt, i simply paid the market price on the day which was the all time high at the time of purchase and in the next few days it dipped to $2.20.
I suspect in 6 months time, $5, $6 or $7 will seem "cheap" for this company.


----------



## michael_selway

nizar said:
			
		

> You must look at the future growth in earnings. Id be very happy to pay 15x earnings for a company with 30%pa earnings growth.




I do look at earnings growth, forward Terminal PE of 10

*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 16.8 69.9 67.6 43.0 
DPS 0.0 7.5 13.3 7.5 

EPS(c) PE Growth 
Year Ending 30-06-07 69.9 10.1 316.3% 
Year Ending 30-06-08 67.6 10.5 -3.3% * 

thx

MS


----------



## rederob

michael_selway said:
			
		

> I do look at earnings growth, forward Terminal PE of 10
> 
> *Earnings and Dividends Forecast (cents per share)
> 2006 2007 2008 2009
> EPS 16.8 69.9 67.6 43.0
> DPS 0.0 7.5 13.3 7.5
> 
> EPS(c) PE Growth
> Year Ending 30-06-07 69.9 10.1 316.3%
> Year Ending 30-06-08 67.6 10.5 -3.3% *
> 
> thx
> 
> MS



MS
I believe you are relying on Comsec forecasts.
If that is the case, then you need to remember that they are based on their model forecast future prices for the metals mined.
Comsec has seldom been close to the money in forecasting metal prices in the past 4 years and if you took the time to research their success rate, you would do what I do and ignore their numbers totally.

toothfairy
Why would I pay more for something I already have plenty of? In my case it's not a matter of science as to how much I pay, it's a question of the price representing what I deem as value.


----------



## toothfairy

rederob said:
			
		

> toothfairy
> Why would I pay more for something I already have plenty of? In my case it's not a matter of science as to how much I pay, it's a question of the price representing what I deem as value.




Hi rederob,
sorry, I didn't know that you already had a lot of it, in that case probably not necessary to chase. Just hypothetically if it drops to $5.70 and then goes back up convincingly, would you buy it at say $6.20? For me, I do set targets & limits and whatever, but when it comes to the last minute crunch, I could change my mine.
I think you have more in depth knowledge in these topics then many of us on this forum, would you please give me some advise on my posting in the ZFX forum dated 15-November-06. That is in regards to confusing / contradicting reports on zinc prices. Nobody seems to have replied yet. Regards


----------



## rederob

toothfairy said:
			
		

> Hi rederob,
> sorry, I didn't know that you already had a lot of it, in that case probably not necessary to chase. Just hypothetically if it drops to $5.70 and then goes back up convincingly, would you buy it at say $6.20? For me, I do set targets & limits and whatever, but when it comes to the last minute crunch, I could change my mine.
> I think you have more in depth knowledge in these topics then many of us on this forum, would you please give me some advise on my posting in the ZFX forum dated 15-November-06. That is in regards to confusing / contradicting reports on zinc prices. Nobody seems to have replied yet. Regards



toothfairy
I have not read the other post of yours, but that might not be a problem.
First, in relation to KZL, in October it broke over $5.80 which was the upper band of its long term trend channel (at least the channel I use for investing).
When KZL hit $7 it was a disaster (albeit short term) waiting to happen. Buying into KZL above $6 does not, in my view, represent value, and leaves one open to $2 potential downside risk.
On zinc prices, we are presently having a technical correction - expect a few more, and much worse in months to come.
Will zinc prices rise or fall?
Tomorrow, I have no idea.
Next month I reckon zinc will have tacked on at least 10% from present levels.
I have very little doubt that on the basis of normal market behaviour zinc prices will comfortably exceed $5000/tonne in early 2007.
At the moment I anticipate LME inventory drawdowns will fall to about 2000 tonnes/week, which is only around 500 tonnes off the recent daily drawdowns.  But in tight markets this is what we need to come to expect.  If I have called it wrong and the drawdowns remain high, then my $5000 figure will become $6000.
 As to whether or not ZFX or CBH or PEM or KZL is better than the other really depends on what you want to achieve.  I like KZL for the reasons earlier outlined. But when you pick up a fully franked dividend cheque for $3,500 it makes you think twice about investing more in a company not paying dividends over one that delivers in spades.


----------



## nizar

rederob said:
			
		

> toothfairy
> I have not read the other post of yours, but that might not be a problem.
> First, in relation to KZL, in October it broke over $5.80 which was the upper band of its long term trend channel (at least the channel I use for investing).
> When KZL hit $7 it was a disaster (albeit short term) waiting to happen. Buying into KZL above $6 does not, in my view, represent value, and leaves one open to $2 potential downside risk.
> On zinc prices, we are presently having a technical correction - expect a few more, and much worse in months to come.
> Will zinc prices rise or fall?
> Tomorrow, I have no idea.
> Next month I reckon zinc will have tacked on at least 10% from present levels.
> I have very little doubt that on the basis of normal market behaviour zinc prices will comfortably exceed $5000/tonne in early 2007.
> At the moment I anticipate LME inventory drawdowns will fall to about 2000 tonnes/week, which is only around 500 tonnes off the recent daily drawdowns.  But in tight markets this is what we need to come to expect.  If I have called it wrong and the drawdowns remain high, then my $5000 figure will become $6000.
> As to whether or not ZFX or CBH or PEM or KZL is better than the other really depends on what you want to achieve.  I like KZL for the reasons earlier outlined. But when you pick up a fully franked dividend cheque for $3,500 it makes you think twice about investing more in a company not paying dividends over one that delivers in spades.




KZL will earn $1/share this year if zinc averages us$2/lb this year as i suspect it will. I am more than happy to pay $7 for a company with 30%pa earnings growth. In fact, $10 is still cheap in my view.

I see KZL at $10 in a few months time. It will end FY2007 higher than that because of upside from Admiral Bay drilling due to start in the first quarter of 2007, and as brokers lift their forecasts as the broader market begins to understand whats happening to zinc metal. Their large shareholding in MLM gives exposure to nickel, which is still in very short supply.

They will initiate dividends this year, my call is 10c/share.

KZLs production:

2006: 35kt Zn, 6kt Cu
2007: 50kt Zn, 25kt Cu
2008: 70kt Zn, 40kt Cu
2009: 100kt Zn, 50kt Cu

There is still potential for them to increase their resources and thus production. King Vol can add another 10 years mine life.

This company is a winner.


----------



## Damuzzdu

nizar said:
			
		

> KZL will earn $1/share this year if zinc averages us$2/lb this year as i suspect it will. I am more than happy to pay $7 for a company with 30%pa earnings growth. In fact, $10 is still cheap in my view.




nizar,

Not trying to put a dampner on yr Zn party, but Zn will have to rocket skywards well over $US5000/tonne for Zn to ave $US2.00/lb for the whole of 06/07.

I am keeping a very close eye on this number (as I have a large ZFX holding), and as of today the ave price for 06/07 stands at $US1.63039/lb.

I have a worksheet which explains all this just a bit undersure of how to upload here for all to see.

regards
john


----------



## nizar

Damuzzdu said:
			
		

> nizar,
> 
> Not trying to put a dampner on yr Zn party, but Zn will have to rocket skywards well over $US5000/tonne for Zn to ave $US2.00/lb for the whole of 06/07.
> 
> I am keeping a very close eye on this number (as I have a large ZFX holding), and as of today the ave price for 06/07 stands at $US1.63039/lb.
> 
> I have a worksheet which explains all this just a bit undersure of how to upload here for all to see.
> 
> regards
> john




No dampner at all bro.
I sold out of KZL a few weeks ago.

Its a great company and very fond, but like i say bottom line is, i only make money when the share price goes up - regardless of fundamentals and zinc price, etc.

If it starts going up and 7.87 (whatever previous high was) is broken, ill be back in no doubt.

This company is a winner.

Thanks for sharing your views though, and for the record, yes i think us$5,000/tonne is only the beginning, but thats just my opinion.


----------



## michael_selway

nizar said:
			
		

> No dampner at all bro.
> I sold out of KZL a few weeks ago.
> 
> Its a great company and very fond, but like i say bottom line is, i only make money when the share price goes up - regardless of fundamentals and zinc price, etc.
> 
> If it starts going up and 7.87 (whatever previous high was) is broken, ill be back in no doubt.
> 
> This company is a winner.
> 
> Thanks for sharing your views though, and for the record, yes i think us$5,000/tonne is only the beginning, but thats just my opinion.




Hi Nizar

Did you sell KZL because you thought it wasnt worth the market price at the time?

thx

MS


----------



## rederob

damuzzdu
Given the zinc price has already breached $2 and fallen back a touch, if it is well over $2 by Xmas (which I think is likely), then a rate of increase less than the past 5 months will allow it to average $2 for the financial year.
I think that is well within in the realms of possibility.


----------



## nizar

michael_selway said:
			
		

> Hi Nizar
> 
> Did you sell KZL because you thought it wasnt worth the market price at the time?
> 
> thx
> 
> MS




No, i sold because im in this game to make profit.
Is the company prospects good? YES
But i only make money when the share price goes up.
The main reason i sold was because I thought it was due for a breather after a sharp run (i bought 4 weeks earlier for 5.95) and i feared a general correction after US elections.


----------



## Out Too Soon

So when do we get back into KZL,CBH & ZFX???? Where is the Zinc price going today?


----------



## Fab

Based on the following Macquarie report received today. Zinc stocks should still outperform the market for some time  

Resources Sector: Are Base metal prices losing steam?

For the past two weeks, there has been selling across-the-board in base metals, as concerns about slowing demand have emerged, and as the physical copper market has continued to ease. However, the key issue is whether the slowdown will be enough to tip each metal into surplus. Copper appears to have moved into small surplus while aluminium and nickel may see some inventory increases in the short-term, leaving them vulnerable to further downside. However, zinc stands out as having the most bullish fundamentals over the next few months and thus MRE expect zinc prices to outperform.

With sentiment turning more bearish, global resource stocks have been hit hard, particularly the Australian listed miners. Therefore with the potential for metal prices to weaken further (particularly copper), Macquarie Research Equities (MRE) analysts are not adverse to investors reducing positions in the short-term.

Stronger for longer. Undoubtedly, the China phenomenon continues apace as the influences of urbanisation and industrialisation remain supportive of unrivalled economic growth. More specifically, robust (albeit moderating) metals intensive fixed asset investment growth continues to place great
pressure on the broader commodities complex and ensures the duration of the current cycle is likely to be supported for an extended period.


----------



## michael_selway

Out Too Soon said:
			
		

> So when do we get back into KZL,CBH & ZFX???? Where is the Zinc price going today?




Hi you forgot PEM

thx

MS


----------



## nizar

michael_selway said:
			
		

> Hi you forgot PEM
> 
> thx
> 
> MS




PEM is not a zinc pure play.
If you wanna include them might as well include OXR.


----------



## Damuzzdu

LME stock for Tuesday 21 Nov:

89450 tonnes -950 tonnes

Cheers
John


----------



## alankew

wrong thread but can anyone remember the thread about platinum being at its lowest levels since time began-sounds familiar


----------



## chops_a_must

alankew said:
			
		

> wrong thread but can anyone remember the thread about platinum being at its lowest levels since time began-sounds familiar



???

https://www.aussiestockforums.com/forums/showthread.php?p=94550#post94550


----------



## nizar

us$1.88/lb for the spot price was the bottom??


----------



## alankew

Chops thanks did a search on Platinum and came up with nothing yesterday,did the same today and found it.Anyone got opinions as to whether platinum will go the same way as other commodities in short supply


----------



## chops_a_must

alankew said:
			
		

> Chops thanks did a search on Platinum and came up with nothing yesterday,did the same today and found it.Anyone got opinions as to whether platinum will go the same way as other commodities in short supply



It looks like the Platinum demand will outstrip supply next year. By about 20,000 ounces, I'm led to believe. I don't think the Platinum price will go up a huge amount, because the cheaper Palladium can be substituted in a lot of uses. That's what they did when a similar thing happened in 2001. It is also my tip for the metal of next year, Palladium that is.

In terms of the stocks, it doesn't really effect them either way the purchasers go, because Platinum producers also produce the cheaper Palladium. So yeah, that's a pretty basic look at it I guess.


----------



## dlineinvestor

The following article gives very good insight into the suppy and demand issues for zinc and how it relates to the copper stockpiles and price.

http://www.mineweb.net/whats_new/438214.htm


----------



## chops_a_must

Zinc and Nickel inventory levels up:

Aluminum 683925 +600  
Copper 157725 +850  
Nickel 6942 +588  
Lead 44800 +450  
Zinc 87650 +100 

What the?


----------



## nizar

Simple. Higher prices curtail demand. Laws of economics. But its even 2 early to say that, its only 1 day.


----------



## Fab

I looked at kitcometals.com this morning and noticed that mostly metals price were down.
I then received the following news letter which states that they went up . Who to believe and where to find an accurate LME metals price:

MORNING MARKET REPORT BY Alan Kohler
November 28 2006

Market Summary				   
Index	Last	(+/-)	Change	   
Dow Jones	12,121.79	- 158.79	1.29%	   
NASDAQ	2,405.92	- 54.34	2.21%	   
S&P 500	1,381.96	- 18.99	1.36%	   
DAX	6,298.17	- 113.79	1.77%	   
FTSE 100	6,050.10	- 72.00	1.18%	 


The decline of the US dollar has finally had a sizeable impact on the stockmarket. It fell to a new 20-month low versus the Euro on Monday, combining with disappointing sales forecasts from Wal-Mart Stores Inc. and rising crude oil prices to drive out the buyers from stocks and send the main market indices tumbling. Fears of possible diversification of dollar reserves by Asian central banks and concerns that the Euro zone's interest-rate outlook is more favorable than that in the United States helped the Euro stay above the US$1.30 level.

And the Europeans are starting to worry about the inexorable rise of the Euro: French Finance Minister Thierry Breton urging vigilance on the dollar's decline, adding it will come up for discussion at a meeting of European finance ministers in Brussels. OECD Secretary General Angel Gurria also voiced some concerns, saying that the Euro's strength posed productivity and competition risks for Europe. 
Nick Bennenbroek, currency strategist at Brown Brothers Harriman told Reuters: "Market sentiment is bearish on the dollar. Part of that is growing expectations for US rate cuts."

The Euro was up 0.2% on the day at US$1.3119, after jumping to a 20-month high of US$1.3172, according to Reuters data. Late Friday in New York, the euro was at US$1.3090. The weak dollar helped push US crude oil futures higher, adding to pressure on the stock market from Wal-Mart's disappointing sales forecast over the weekend and a report in weekly financial newspaper Barron's that Google was overvalued. The poor sales forecast for Wal-Mart has raised doubts about a much-hyped increase in US consumers' holiday spending. Wal-Mart's stock was down 2.2 percent at US$46.86.

The Dow Jones average fell 1.3%, the S&P 500 1.4% and the NASDAQ 2.2%. European shares fell to five-week lows, as the Euro’s strength weighed on export-reliant companies such as car makers. The pan-European FTSEurofirst 300 index fell 1.52% to 1,429.00, its lowest level since October 18.

In London base metals prices generally rose. Nickel jumped 6.3%, copper was up 1.5%, zinc 2.4%, and the LME index went up 3.5%. Talking about nickel, one analyst in London told Reuters: "The supply and demand fundamentals are still very tight - especially stockpiles against usage ratios everywhere in the world. Crude oil futures rose were boosted by OPEC talk of additional production cuts. The oil market was also playing catch-up after the Thanksgiving holidays, dealers said. Addison Armstrong, analyst at TFS Energy, said in a research note: "The oil markets are also being supported by a sharply weaker dollar, which makes dollar-denominated oil cheaper in euros and yen". The price of West Texas intermediate crude went up US$1.95 to US$59.88, a rise of 3.4%.

On Comex, gold for December delivery was up US$11.60 at US$640.50 an ounce, buoyed by higher oil prices and the dollar's weakness. Spot gold prices hit a three-month high of US$641.75 an ounce, before easing back slightly to around US$639.40.


----------



## 2020hindsight

(Urgent) Questions for "the night shift" (if they're still up)...
I dont see much reaction to Wall Street's 2% drop in here (whether commodities/resources or just general?).   Can we expect a severe drop this morning (20 minutes?) - good time to place stops? 

Next question - when to buy back in? this afternoon? 

Ahhh  these an other questions will be known to all - by Xmas lol.


----------



## Fab

My guess is resources should do ok but blue chip will go down


----------



## dj_420

well metal prices arent that far off the pace, they have come back a bit but zinc is still holding 2.00 and copper has bounced back from the 3.00 mark last week or so.

copper held much stronger than anticipated with supply concerns, which helped push the zinc price back over 2.00 mark.

we prob will see weakness in resources but the spot prices are still very high with zinc near record levels.


----------



## michael_selway

Fab said:
			
		

> My guess is resources should do ok but blue chip will go down




Would "BHP" & "RIO" fit in your context of "bluechip" above?

thx

MS


----------



## stoxclimber

Is anyone else concerned about a) the steady ins in Singapore and b) the drop off in cancellations?


----------



## chops_a_must

stoxclimber said:
			
		

> Is anyone else concerned about a) the steady ins in Singapore and b) the drop off in cancellations?



Yeah, I noticed that a while back. But what has happened is that they have begun to use Cobalt based products as a replacement, or so I can gather. Until the Cobalt prices peak, zinc might stagnate a bit. Any other opinions?


----------



## michael_selway

stoxclimber said:
			
		

> Is anyone else concerned about a) the steady ins in Singapore and b) the drop off in cancellations?




what do u define as "steady"? once a week? once a month? how many tonnnes per week/month?

thx

MS


----------



## stoxclimber

By steady I mean that over the recent couple of months there have been almost 0 ins for zinc, and now in Singapore we've seen them for about a week straight. Been about 4000 tonnes this week, 3000 in one day. Plus the cancellations haven't been very strong - now only about 7k tonnes cancelled.


----------



## rederob

chops
Cobalt is over $30/lb and zinc is $2/lb.
I am confused as to why cobalt is being used instead of zinc, so your help will be appreciated.


----------



## chops_a_must

rederob said:
			
		

> chops
> Cobalt is over $30/lb and zinc is $2/lb.
> I am confused as to why cobalt is being used instead of zinc, so your help will be appreciated.



Because Cobalt based paint is the alternative to galvanisation by and large. I am also led to believe by an industrial chemist, that even a small amount of cobalt added into alloys, can reduce corrosion substantially.

I guess it depends on how much people think they can save by using these methods, rather than the preferred zinc.


----------



## specman

chops_a_must said:
			
		

> Because Cobalt based paint is the alternative to galvanisation by and large. I am also led to believe by an industrial chemist, that even a small amount of cobalt added into alloys, can reduce corrosion substantially.
> 
> I guess it depends on how much people think they can save by using these methods, rather than the preferred zinc.




Well it appears right now that cobalt prices have exploded and demand for this metal is greater than zinc.It seems some people cannot book any material for next year.

Forget about zinc,does anyone know any pure cobalt plays?


----------



## chops_a_must

specman said:
			
		

> Well it appears right now that cobalt prices have exploded and demand for this metal is greater than zinc.It seems some people cannot book any material for next year.
> 
> Forget about zinc,does anyone know any pure cobalt plays?



There are no cobalt pure plays that I know of. I think it's found in other ore bodies. CMR look like they have a bit though.

EDIT: Yes, it is found within other ore bodies:

"Cobalt is not found as a free metal and is generally found in the form of ores. Cobalt is usually not mined alone, and tends to be produced as a by-product of nickel and copper mining activities."

http://en.wikipedia.org/wiki/Cobalt#Occurrence


----------



## michael_selway

stoxclimber said:
			
		

> By steady I mean that over the recent couple of months there have been almost 0 ins for zinc, and now in Singapore we've seen them for about a week straight. Been about 4000 tonnes this week, 3000 in one day. Plus the cancellations haven't been very strong - now only about 7k tonnes cancelled.




yeah a few one-off "ins", its happened through the year

when did you first follow LME "ins'

thx

MS


----------



## Speedbird675

Ease in drawdowns and cancellation activity is mainly because of American iron and steel institute reporting low steel production in the US for oct nov and metal being suddenly available in the US - couple that with thanksgiving holidays and producers destocking metal in the light of high zinc prices and consumers holding off purchases expecting the prices to come down ahead of the holiday season.

The auto industry will suddenly steam up in the few weeks and will start to order steel from mills. Mills will be caught short of zinc as a result of destocking of material and their inventories will be quite low. With no new supply coming up on stream in 2007 and low LME stocks, will trigger another bull run for zinc.


----------



## MalteseBull

Zinc  	December 04,13:45
Bid/Ask 	2.0510 	- 	2.0669
Change 	+0.0227 		+1.12%
Low/High 	2.0283 	- 	2.0782



GO CBH, KZL, ZFX, PEM


----------



## chops_a_must

specman said:
			
		

> Well it appears right now that cobalt prices have exploded and demand for this metal is greater than zinc.It seems some people cannot book any material for next year.
> 
> Forget about zinc,does anyone know any pure cobalt plays?



I got this reply from MCR today:

"RE: Cobalt Capacity 

We make money from Cobalt as a by-product recovered from our nickel mining operations. As such we do get the benefit of any price increases in Cobalt. The total value of by-product copper and cobalt together is about 3% of our revenue.

Many thanks for your support of and interest in our Company.

Best regards

David Moore

Managing Director

Mincor Resources NL"

A chance of a 1 - 2% increase in profit thanks to Cobalt alone... not bad!


----------



## stoxclimber

michael_selway said:
			
		

> yeah a few one-off "ins", its happened through the year
> 
> when did you first follow LME "ins'
> 
> thx
> 
> MS




would you still call these ins "one offs"?


----------



## chops_a_must

Another gain in inventories for Zinc. Price still going up though...


----------



## 2020hindsight

Chops sorry - I'm too busy giving you a hard time on another thread lol
and I'm a lazy buga ...
what's the latest on gold pls. ?  thanks m8


----------



## chops_a_must

2020hindsight said:
			
		

> Chops sorry - I'm too busy giving you a hard time on another thread lol
> and I'm a lazy buga ...
> what's the latest on gold pls. ?  thanks m8



Are you? I'm enjoying it. As long as people take in what I post, I don't mind.

Dec 05, 2006 08:54 NY Time 
 Bid/Ask 646.40 - 647.40 
 Low/High 640.60 - 648.40 
 Change +1.20   +0.19% 
30daychg +18.80   +3.00% 
1yearchg +137.60   +27.07% 

Cheers.


----------



## 2020hindsight

thanks , chops, here's a brief video on How to respond to a bearish attitude 
http://www.youtube.com/watch?v=lKKkPaFPwmU


----------



## Fab

Why are zinc stocks going down today ??


----------



## chops_a_must

2020hindsight said:
			
		

> thanks , chops, here's a brief video on How to respond to a bearish attitude
> http://www.youtube.com/watch?v=lKKkPaFPwmU



Absolutely hilarious. 

By the way, what do you think of the chances of a bull market run next year in Pamplona?


----------



## borat

Zinc down: -1.75%
Zinc warehouse levels up: 86525	+775

Could we be seeing another slide in Zinc stocks soon?


----------



## 2020hindsight

chops_a_must said:
			
		

> By the way, what do you think of the chances of a bull market run next year in Pamplona?



TRUE FRIEND extract 

The branding iron heating, the crush nigh on ready , with "FRIEND" glowing red and "full-fired"
Your nerve ends are bleating, "hey, Staunch there and steady!, and say friend, you feeling inspired?"
We just have to charge through the streets of Pamploma , On route to a fight with a 'gator"
You'll either get "Sure, LET's DO IT then Rambo!!  or maybe " ummm naaa, - see ya later". 

lol - think it's a " naa see ya later" from me lol.  I'm content with the City2Surf


----------



## stoxclimber

I think we can safely say that it wasn't just one off ins now...


----------



## specman

Most of the "ins" have been at Singapore so I'm speculating that Chinese zinc smelters are taking advantage of current high prices ahead of the deadline for the ending of tax rebates and increasing exports.

http://www.hk-imail.com.hk/news_detail.asp?pp_cat=22&art_id=31275&sid=10754417&con_type=1

This might be the reason for rising inventories as well as buyers holding off for cheaper prices.


----------



## toc_bat

hi all

ok i know that ins are - institutional net settlements, but that is all, would anyone care to expand on what you guys are talking about here?

thx


----------



## chops_a_must

specman said:
			
		

> Most of the "ins" have been at Singapore so I'm speculating that Chinese zinc smelters are taking advantage of current high prices ahead of the deadline for the ending of tax rebates and increasing exports.
> 
> http://www.hk-imail.com.hk/news_detail.asp?pp_cat=22&art_id=31275&sid=10754417&con_type=1
> 
> This might be the reason for rising inventories as well as buyers holding off for cheaper prices.



Yeah, I remember that about a month back now. Interesting to see what effect it will have.


----------



## specman

toc_bat said:
			
		

> hi all
> 
> ok i know that ins are - institutional net settlements, but that is all, would anyone care to expand on what you guys are talking about here?
> 
> thx



"ins" is the tonnage delivered into LME warehouses and "outs" is the tonnage taken out.

I believe only a small percentage of contracts result in physical delivery as most contracts are hedges and sold or bought back before settlement.The deliveries in and out of warehouses tend to reflect the true picture of physical supply and demand.


----------



## specman

chops_a_must said:
			
		

> Yeah, I remember that about a month back now. Interesting to see what effect it will have.




Weaker zinc prices from the looks of things.Good opportunity to top up if you are a believer of the zinc story.


----------



## borat

Taking a pumbling today...

Bid/Ask1.9527-1.9618Change-0.0748-3.69%Low/High1.9527-2.0661

Dumped some of mine yesterday on anticipation of a further slide, wish i'd done it 2 days ago... but no point in 'what ifs'!!

Any ideas on how far it could go? ideas?


----------



## Fab

Is it the beginning of the end for ZINC ?


----------



## Fab

borat said:
			
		

> Taking a pumbling today...
> 
> Bid/Ask1.9527-1.9618Change-0.0748-3.69%Low/High1.9527-2.0661
> 
> Dumped some of mine yesterday on anticipation of a further slide, wish i'd done it 2 days ago... but no point in 'what ifs'!!
> 
> Any ideas on how far it could go? ideas?





Looking like resources are trying to bounce back on the LME. Probably pointless  to look at it until US job data is released overnight


----------



## michael_selway

stoxclimber said:
			
		

> I think we can safely say that it wasn't just one off ins now...




so would you say a bear market for zinc price from here onwards and indefintely?

thx

MS


----------



## Fab

michael_selway said:
			
		

> so would you say a bear market for zinc price from here onwards and indefintely?
> 
> thx
> 
> MS



Probaly not in my opinion as it appears to be bouncing back on 4288 support. Short term correction more likely


----------



## nizar

michael_selway said:
			
		

> so would you say a bear market for zinc price from here onwards and indefintely?
> 
> thx
> 
> MS




indefinately?
has a bear market in history ever lasted indefinately?


----------



## stoxclimber

michael_selway said:
			
		

> so would you say a bear market for zinc price from here onwards and indefintely?
> 
> thx
> 
> MS




Dude, don't be so ridiculous. I said I was concerned about the consistent ins over about 2 weeks (at the time). You said they were one off and that this thing happens all the time. Then, after it kept continuing, I said that it doesnt seem like it's a one off any more...


now you think that I'm saying zinc is a bear market forever?


----------



## eMark

Can someone clarify what happened last night? According to KITCO metals website, all commodity prices rose, including Zinc

Zinc December 08,11:50 
Bid/Ask 1.9998 - 2.0003 
Change +0.0445  +2.27% 
Low/High 1.9554 - 2.0098 

Yet when looking at another website, ie CNN money, it states that most commodity prices fell

Is there a time lag? Or a more accurate representation of current prices?

How did metals fare overnight?


----------



## 2020hindsight

nizar said:
			
		

> has a bear market in history ever lasted indefinately?



 http://www.youtube.com/watch?v=lKKkPaFPwmU
so the bear mins occasionally?
so we have to eat tuna instead of salmon for a week or two?


----------



## rederob

eMark said:
			
		

> Can someone clarify what happened last night? According to KITCO metals website, all commodity prices rose, including Zinc
> 
> Yet when looking at another website, ie CNN money, it states that most commodity prices fell
> 
> Is there a time lag? Or a more accurate representation of current prices?
> 
> How did metals fare overnight?



You can always double chaeck against Basemetals.com:
http://www.basemetals.com/
Bottom line was a favourable close to most metals with copper still under pressure due to highest inventory levels in a few years.


----------



## Fab

Very good annoucement this morning. Should go up today


----------



## chops_a_must

With Zinifex shacking up in Umicore, there will clearly be less zinc on the open market, as the raw material will just be moving within the one company... so the Zinc price is probably going to go bananas.


----------



## Freeballinginawetsuit

chops_a_must said:
			
		

> With Zinifex shacking up in Umicore, there will clearly be less zinc on the open market, as the raw material will just be moving within the one company... so the Zinc price is probably going to go bananas.





Huh!.....Is that a snap of you Chops, he's muttering your calling card.


----------



## chops_a_must

Freeballinginawetsuit said:
			
		

> Huh!.....Is that a snap of you Chops, he's muttering your calling card.



Nah, this is me:



But if you want to get the play on words:
http://www.youtube.com/watch?v=qItugh-fFgg


----------



## Freeballinginawetsuit

chops_a_must said:
			
		

> Nah, this is me:
> 
> 
> 
> But if you want to get the play on words:
> http://www.youtube.com/watch?v=qItugh-fFgg




Wow, thats a long goatee!. I might book you for a Santa gig at work :


----------



## barney

chops_a_must said:
			
		

> Nah, this is me:
> 
> 
> 
> But if you want to get the play on words:
> http://www.youtube.com/watch?v=qItugh-fFgg




Hey Chops ..... You are too good looking to be a drummer !!! ........... are you sure you're not a guitar player  
(PS did I mention I'm a guitar player ............. pity I'm so ugly !!!   No pics included )


----------



## chops_a_must

barney said:
			
		

> Hey Chops ..... You are too good looking to be a drummer !!! ........... are you sure you're not a guitar player
> (PS did I mention I'm a guitar player ............. pity I'm so ugly !!!   No pics included )



Nah, 12 years of playing Aussie Rules stuffed my fingers, so I can't play guitar.

What sort of music do you play? Do you like Brian Setzer? Mmmm... Brian Setzer.


----------



## barney

chops_a_must said:
			
		

> Nah, 12 years of playing Aussie Rules stuffed my fingers, so I can't play guitar.
> 
> What sort of music do you play? Do you like Brian Setzer? Mmmm... Brian Setzer.




Nah......... Not a Stray Cats kind a guy ....... more a mixture of Ritchie Blackmore (Deep Purple) Toni Iommi (Black Sabbath) and the guitarists from "Wishbone Ash" (cant remember their names) ............ Rock-Blues ... Feel with attitude ; thats what guitar playing is all about (IMO)......  Now how do we relate Zinc to this?? ............ I have no idea .......... my guitar strings are "Zinc" coated to stop rust !! .... Hows that??    Cheers, Barney.


----------



## Dukey

Nice tie-in Barney.

My guitar strings are rust coated to stop the zinc.

Maybe I should practice once in a while and buy new strings - it might push Zn price a tad !!!!
-dukey


----------



## MalteseBull

Zinc  	December 12,11:49
Bid/Ask 	2.0056 	- 	2.0079
Change 	+0.0110 		+0.55%
Low/High 	1.9765 	- 	2.0397


----------



## chops_a_must

barney said:
			
		

> Nah......... Not a Stray Cats kind a guy ....... more a mixture of Ritchie Blackmore (Deep Purple) Toni Iommi (Black Sabbath) and the guitarists from "Wishbone Ash" (cant remember their names) ............ Rock-Blues ... Feel with attitude ; thats what guitar playing is all about (IMO)......  Now how do we relate Zinc to this?? ............ I have no idea .......... my guitar strings are "Zinc" coated to stop rust !! .... Hows that??    Cheers, Barney.



Zinc's been down too long in the midnight sea
Oh what's becoming of me.

Unless it has flam rolls, a circular and rolling rhythm, or is in odd time i get bored and can't be bothered playing it. Lol!  Incompetent bass players bug me no end.


----------



## nizar

http://www.marketwatch.com/news/sto...-2280-42D8-9BDC-78FDB342005E}&dist=TNMostRead


----------



## wavepicker

nizar said:
			
		

> http://www.marketwatch.com/news/sto...-2280-42D8-9BDC-78FDB342005E}&dist=TNMostRead





Interesting to see an article like that coincides with the peak in the bullmarket. At market tops you see these in abundace along with those of extreme optimism. At market bottoms all you hear is bad news and extreme pessimism, which although difficult is the time when you should buy. Now IMO is the time for selling!! Might be better to revisit Zinc when everybody comes to their senses. 

Have a look at the zinc chart, I would tkae this article with a dose of salt.

Cheers


----------



## barney

Howdy Niz, I know you are fairly bullish on Zinc (and with good reason), but I think caution, as Wavepicker points out, is the order of the day atm. The above article was from Basemetals ...... I also posted an article from Basemetals on the ZFX thread, which was slightly negatively slanted, so even their Journo's beg to differ ....... Here is another article on metals (incl zinc) .... certainly not Bearish, but considering ZFX has closed pretty much on its low 3 of the last 4 days, I'm treading carefully (as I know you do also)  Cheers Barney.
http://www.lme.com/dec06-article1.asp#zinc


----------



## Magdoran

wavepicker said:
			
		

> Interesting to see an article like that coincides with the peak in the bullmarket. At market tops you see these in abundace along with those of extreme optimism. At market bottoms all you hear is bad news and extreme pessimism, which although difficult is the time when you should buy. Now IMO is the time for selling!! Might be better to revisit Zinc when everybody comes to their senses.
> 
> Have a look at the zinc chart, I would tkae this article with a dose of salt.
> 
> Cheers



So true wavepicker!

It’s like the apocryphal story of when you hear the Taxi driver, the local checkout person, your partner’s hairdresser, and your neighbour’s dog telling you to buy something…

You know that it’s probably time to "SELL”. – Because everyone who was going to buy probably has.

Who is “Myra Saefong” anyway?  Anyone know anything about her and her capacity to call Zinc?

Can we please see more solid analysis here? I’d like to hear from the fundamental quadrant since I’m primarily a technical analyst, and have less quoting of obscure journalists who in turn are quoting obscure and unidentified sources labelled “analysts”.  Can we please see more detail and rigour?


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> So true wavepicker!
> 
> It’s like the apocryphal story of when you hear the Taxi driver, the local checkout person, your partner’s hairdresser, and your neighbour’s dog telling you to buy something…
> 
> You know that it’s probably time to "SELL”. – Because everyone who was going to buy probably has.
> 
> Who is “Myra Saefong” anyway?  Anyone know anything about her and her capacity to call Zinc?
> 
> Can we please see more solid analysis here? I’d like to hear from the fundamental quadrant since I’m primarily a technical analyst, and have less quoting of obscure journalists who in turn are quoting obscure and unidentified sources labelled “analysts”.  Can we please see more detail and rigour?
> 
> 
> Regards
> 
> 
> Magdoran




Point taken Mag, from my perspective, I have no knowledge to offer re zinc etc. other than what I read from these "analysts", and I would hope that since they are writing for "Basemetal's" site, they should hopefully carry some creedence (certainly more than I have) ...... My main reason for quoting their slightly "negative" slant was to give a balance re the continuing "over-positive" position of zinc often touted ....... I for one got caught in that euphoria just prior to the last "correction" and did my dough yet again    It was actually a good wake up call, cause I've been doing well since (The old saying ..... Don't fall in love with a stock holds true)  Anyway, that was my motivation for posting those reports.... to keep other "punters" balanced on their thinking, and not just accept that zinc, or any other metal, will continue up exponentially ............. Hope that makes the posts seem more appropriate...... All the best, Barney.


----------



## rederob

From a fundamental perspective zinc has simply got stronger through consolidation in recent weeks.
Anyone thinking that the charts tell the story for commodities has rocks in their heads.
Ask any chartist 12 months ago what the nickel price was likely to be today: If you are lucky enough to find a forecast it could have been from a certifiable lunatic who tipped a doubling in price, and still was still below the mark.
Yesterday BHP closed Century indefinitely while investigations into a death are made: Cannington is the biggest producer of silver, lead and zinc in the world.
A week ago a concentrator mishap knocked off 8,000 tonnes from Zinifex's annual output.
Overnight drawdowns from LME warehouses accounted for 300 tonnes and a further 850 tonnes went into the cancelled category - there were no inflows.
The impact of Cannington and Zinifex takes weeks to hit the consumer market proper, so further and prolonged tightness can be expected: Key market monitoring groups are not forecasting zinc to come into balance until 2008.
While I believe it unwise to buy into zinc equities because their prices are overextended right now, I would not be surprised to see them tack on another 10-20% by end of the March quarter 2007.


----------



## rederob

Oh, a more reliable source:
http://www.ilzsg.org/pdf/LisbonOutlook.ppt#330,10,US Lead National Stockpile
Check out slide 20 and you will get the picture.


----------



## michael_selway

rederob said:
			
		

> While I believe it unwise to buy into zinc equities because their prices are overextended right now, I would not be surprised to see them tack on another 10-20% by end of the March quarter 2007.




so you reckon not much more upside to ZFX, PEM, CBH, KZL from here on in?

thx

MS


----------



## wavepicker

rederob said:
			
		

> Ask any chartist 12 months ago what the nickel price was likely to be today: If you are lucky enough to find a forecast it could have been from a certifiable lunatic who tipped a doubling in price, and still was still below the mark.




I think it's quite a challenge to find anyone who can forecast with accuracy what prices will in 12 months, whether it be a chartist or fundementalist. IMO I think the trend will be down starting early next year. Having said, throughout the years I have noticed however that it's the movements in the markets that precede the fundementals and not the other way around as most think. IMO they are not causing the market to move but are an effect of the psychological trends within the market. The only exception being very long term foreseeable fundemental events which account for 75% of all price motion. This however is very smooth and slow changing.





			
				rederob said:
			
		

> While I believe it unwise to buy into zinc equities because their prices are overextended right now, I would not be surprised to see them tack on another 10-20% by end of the March quarter 2007.




Ofcourse, anything is possible in the market. However if we trade we must think in terms of probabilities. Trade what you see on the chart, it doesn't lie, not what you want to see or expect.

Cheers


----------



## nizar

wavepicker said:
			
		

> Interesting to see an article like that coincides with the peak in the bullmarket. At market tops you see these in abundace along with those of extreme optimism. At market bottoms all you hear is bad news and extreme pessimism, which although difficult is the time when you should buy. *Now IMO is the time for selling!!* Might be better to revisit Zinc when everybody comes to their senses.
> 
> Have a look at the zinc chart, I would tkae this article with a dose of salt.
> 
> Cheers





I do agree.
In fact Iv sold out of my zinc equities several weeks ago, and they ie. CBH and KZL are still sitting below my exit prices.


----------



## nizar

rederob said:
			
		

> Oh, a more reliable source:
> http://www.ilzsg.org/pdf/LisbonOutlook.ppt#330,10,US Lead National Stockpile
> Check out slide 20 and you will get the picture.




As reliable as ABRARE, perhaps ?   

And also - Is 10% in 3 months really worth it once you consider risk ?
The beta with these zinc stocks is pretty high.


----------



## rederob

wavepicker
You know full well that what apears on the chart is a trend or price or indicator "after the fact".
Your opinion and mine are definitely at odds, so one of us will not be right: In the event I am wrong, I will lose a considerable sum of money!
I am clearly saying that the zinc market remains in a bullish state and that it is presently in a period of consolidation - pretty normal given the overbought status it achieved about a month ago.
I would be very surprised if the trend for zinc changed in the next 6 months, and believe it likely to tighten further through most of 2007.
I expect zinc prices too easily achieve $5000/tonne in 2007 and a rise to $6000 seems probable unless the US experiences a major downturn.
These expectations are simply based on the capacity of miners to get metal to refiners, and consumer demand in 2007 continuing to outstrip supply.


nizar
I tend to be a bit more conservative with my forward price estimates, and while I said 10-20% I believe these to be the most reliable "guesses" I can come up with seeing I have no capacity to tell the future.
My view on investing is that I would rather put money on something expensive (in blue sky) that I thought had a chance of a 20% rise in 3 months, than  something cheap that I was unsure of, but "hoped" would retrace to a former high.
To demonstrate, last week I added to my holdings of PDN.


----------



## wavepicker

Hi Rederob,



			
				rederob said:
			
		

> wavepicker
> You know full well that what apears on the chart is a trend or price or indicator "after the fact".



With regard to indicators very much so rederob as they are lagging, totally agree with you on this. However IMO short to intermediate term(6 months to 1 year) fundementals are also lagging. They follow the psychological trends as reflected on the price charts. As you know fundementals can change pretty quickly. 
Our job is 1/ To determine when a trend is in place my analysing the pattern of the trend as represented by the pictures painted by price movement in a chart, 2/ To trade and stay with that trend until it is at risk of ending

Lot's of valuable information can be gleaned from charts, information about the way insiders are buying or slowly selling out(although this is probably more relevant to stocks as commodity markets are too large)



			
				rederob said:
			
		

> Your opinion and mine are definitely at odds, so one of us will not be right: In the event I am wrong, I will lose a considerable sum of money!
> I am clearly saying that the zinc market remains in a bullish state and that it is presently in a period of consolidation - pretty normal given the overbought status it achieved about a month ago.




If you have a large amount of $$ at stake rederob then I hope I am wrong because I have non and therefore nothing to lose.
I understand that you remain bullish zinc and it may well have some minor subdivisions uncompleted before anything major happens. I don't think zinc is consolidating but rather "blowing off" and I think will be back to 3000-3500 within 12 months

Fundementals aside however, isn't it interesting that the metals booms as a whole has happened while the USD has gotten smashed. The 2 are opposite each other. Now what if the USD was to say rally for 1 year, do you think this would a profound impact in the way metals are trading in that time??

All the best


----------



## rederob

wavepicker
There is a key difference between a mineral commodity and an equity in terms of trend picking.
A company can hive off a loss maker, or inept management, and turn things around relatively quickly through its own measures.
Minerals producers sell into global markets and are reliant on demand trends and other suppliers that take risks similar to theirs, possibly on another continent.
The supply chain is long, slow, and relatively transparent: There are no "big" surprises.  If we found another "Century" mine it would be many years before anything came onto the market.
There are many small-bit players that are trying to fill the gaps across the many booming metals that are in demand.  They simply have no hope, but will likely profit handsomely.
Charts are not useful IMO at this juncture because the most likely situation we are at is that of "increased tightness" in zinc, not a move to balance and certainly not a trend to restocking.
Indeed, as the price of zinc has been increasing, consumers have been drawing down on their inventory in the hope that the tide of higher prices through LME (which is the industry price setter and has transparent warehouse data) would turn.
True to form, when zinc went into backwardation at a price that made delivering into spot a more desirable position than holding inventory, LME (in recent weeks) has began to receive inflows of metal on a more regular basis than anytime in the past year.   This trend will continue, as backwardation offers a good price premium to those chancing their arm with any "spare" metal.
"Destocking" zinc is all good and well if you believe you can turn the market around. Note that the Chinese have achieved this through the intervention of the SRB in the global copper market. And the Chinese are presently trying the same for zinc except they do not have a strategic reserve to rely on - just some short term capacity to deliver some excess metal to spot.
It is my view that most of 2007 will be characterised by an underlying theme of zinc destocking, occasional metal inflows, outpaced by overall outflows.
This theme is supported by global trends that have been in place for some years, and the reasonable expectation that conservative growth scenarios pan out in 2007.
For the past 2 years the majority of lesser informed analysts have simply adopted a view that the market has "peaked" and has to fall next year.
It is a view based on the fact that all bull markets come to an end.
I agree that this bull market will unravel, too.
However, I presently see the weight of evidence pushing zinc to a much greater high in 2007.

In relation to the USD, good point.
Don't know the answer.
If one were to rely on "trends", then the USD has further to fall.
So will the trend of continuing higher commodity prices match the ongoing inverse relationship?
And if not, at what price point of the USD will the relationship end?


----------



## wavepicker

rederob said:
			
		

> wavepicker
> Charts are not useful IMO at this juncture because the most likely situation we are at is that of "increased tightness" in zinc, not a move to balance and certainly not a trend to restocking.



 To the contrary rederob, at this juncture, the chart is  very useful. It's almost identical in form and structure(although not magnitude) to that of Gold in May just before it got smashed falling from 730-540. Back then the fundementals where calling for higher prices by years end to over $800, where they not?

What where your fundementals telling you back 1999-2000 about zinc, gold and metals in general, probably not much but a sad state of affairs. I remember the negativity for example in Gold back in 1999 at the height of the dot.com boom when it was touted as a financial relic of no commercial value.


----------



## rederob

wavepicker
There is no "tightness" to the gold market.
Under a present "Agreement" some 500 tonnes can be sold to the general market by Central Banks each year.
So Central Banks can manipulate the price till the cows come home.
It is difficult to "manipulate" a commodity in demand to the extent that zinc is, with such a small market it plays to.
There is no zinc ETF, and outside of LME there is no regulated zinc market.
A more reliable chart to compare zinc against is that of copper a year ago, or of nickel, but certainly not one of gold.
These are commodities that zinc is paralleling on a "lagged" basis.
If you were ever at the Comsec chat site 4 or 5 years ago you would have seen me posting about the impending influence of China and India on our markets.
I was a little late buying into gold equities (early 2002) because I did not understand how "hedging" affected stock prices and profits: I do now.
I think I have a reasonable understanding of commodity markets for an interested investor, but not a "professional".
Accordingly, I will err from time to time.
However, I present my views on zinc based on fundamental drivers that are well in place and only likely to change in the medium term if there is a substantial change to global markets.  Typically my successes are within an 80% probability range.


----------



## michael_selway

nizar said:
			
		

> I do agree.
> In fact Iv sold out of my zinc equities several weeks ago, and they ie. CBH and KZL are still sitting below my exit prices.




i thought you said you want to hold KZL for the ong term?

thx

MS


----------



## bvbfan

rederob said:
			
		

> There is no zinc ETF




Argh but there is, ETF on the LSE for a range of metals and other commodities
Zinc, Copper, Gold etc

Full list here
http://www.etfsecurities.com/en/document/etfs_document.asp#product


----------



## rederob

bvbfan said:
			
		

> Argh but there is, ETF on the LSE for a range of metals and other commodities
> Zinc, Copper, Gold etc
> 
> Full list here
> http://www.etfsecurities.com/en/document/etfs_document.asp#product



bvbfan
Thanks.
I stand corrected.
ZINC was listed in late September: December trades are low with a total US$ value in December of less than $50k.


----------



## PureCoco

Are december trades low due to the christmas season with people away and enjoying themselves and family?  Companies closing or slowing trade with a 1 - 2 week period off? Would this seasonal trend follow across all trades.....except Santa visits.


----------



## barney

I was a little late buying into gold equities (early 2002) because I did not understand how "hedging" affected stock prices and profits: I do now.
I think I have a reasonable understanding of commodity markets for an interested investor, but not a "professional".


Howdy Rederob,  Question from me personally, but I am sure other newcomers will be also interested ...... Would you be able to give a brief (or long    lesson as to how hedging does affect stock prices?  This would be V interesting .... Even a reference to a site/literature etc. with good info would be appreciated. Thanks, Barney.


----------



## nizar

rederob said:
			
		

> My view on investing is that I would rather put money on something expensive (in blue sky) that I thought had a chance of a 20% rise in 3 months, than  something cheap that I was unsure of, but "hoped" would retrace to a former high.
> To demonstrate, last week I added to my holdings of PDN.




Agree 100%. I invest in very much the same way. Gotta love blue skies 

Rederob and wave thanks for the excellent thought-stimulating discussion.

MS - i dont really have long-term holds anymore. Riding long-term trends yes i dont mind (actually this is preferred), but im only willing to give back a certain (pre-determined) extent of profits, and nothing more, to stay in the trade, no matter how good the fundamental outlook.


----------



## Magdoran

barney said:
			
		

> Point taken Mag, from my perspective, I have no knowledge to offer re zinc etc. other than what I read from these "analysts", and I would hope that since they are writing for "Basemetal's" site, they should hopefully carry some creedence (certainly more than I have) ...... My main reason for quoting their slightly "negative" slant was to give a balance re the continuing "over-positive" position of zinc often touted ....... I for one got caught in that euphoria just prior to the last "correction" and did my dough yet again    It was actually a good wake up call, cause I've been doing well since (The old saying ..... Don't fall in love with a stock holds true)  Anyway, that was my motivation for posting those reports.... to keep other "punters" balanced on their thinking, and not just accept that zinc, or any other metal, will continue up exponentially ............. Hope that makes the posts seem more appropriate...... All the best, Barney.



Hi barney,


Actually my comment was not specifically directed at your post.  I think when I posted my general request for more rigour I hadn’t read your post…

I am genuinely interested in considering well thought out FA views on Zinc as I am a believer in factoring in fundamentals into my technical analysis.  Sounds odd, but F/A can be helpful at times.

Hence my request for more in depth comments than some of the linked commentaries which I felt were fairly threadbare when you examined them (although I appreciate Rederob posting up the recent links and will follow them up in due course).

I also don’t have a problem with negatively slanted comments if they are well thought out, and marshal their thoughts with some rigour.

Anyway, good to hear you’re having a good run!


Regards,


Magdoran


----------



## Magdoran

rederob said:
			
		

> True to form, when zinc went into backwardation at a price that made delivering into spot a more desirable position than holding inventory, LME (in recent weeks) has began to receive inflows of metal on a more regular basis than anytime in the past year.   This trend will continue, as backwardation offers a good price premium to those chancing their arm with any "spare" metal.
> 
> ...
> 
> "Destocking" zinc is all good and well if you believe you can turn the market around. Note that the Chinese have achieved this through the intervention of the SRB in the global copper market. And the Chinese are presently trying the same for zinc except they do not have a strategic reserve to rely on - just some short term capacity to deliver some excess metal to spot.
> 
> ...
> 
> In relation to the USD, good point.
> Don't know the answer.
> If one were to rely on "trends", then the USD has further to fall.
> So will the trend of continuing higher commodity prices match the ongoing inverse relationship?
> And if not, at what price point of the USD will the relationship end?



Hello Rederob,


Thanks for taking the time to post your views, much appreciated.  You have raised some interesting points in your recent posts today.  

I know you are not a professional in this area, but you have demonstrated an informed grasp of the subject, hence I hope you don’t mind me asking you some probing questions to map out more fully your F/A view on Zinc, and related markets. 


*Backwardation:*
I am curious about your views on backwardation.

The LME lists currently the Cash buyer price at 4464, the 3 month buyer rate at 4365, the 15 months buyer rate at 3722, and the 27 month buyer rate at 3215.

Why are the future rates so different to the current prices?  I note that you consider the effect of this as an incentive to deliver Zinc now at the current prices.  If the future contracts are currently at such levels, doesn’t this mean that the market believes the price is likely to fall, perhaps to around the price levels indicated in the 15 and 27 month time frames?  Or am I missing something here?

*Currency Impact:*
Regarding your view on the USD, then I take it you expect the USD to continue to fall further below the current levels?  What kind of magnitude are you expecting, and in what specific time frame?

Specifically, do you expect the Australian dollar to exceed 0.81 US?  If so, what are your projections – are you expecting a move as far as US 0.90 for example?  Can you please map out a broad timetable of when you expect the currency moves to occur (say indicate a month in which you expect a price to be struck).  (In addition, your general views on the Euro would also be helpful, and perhaps your view on the effects to the Asian currencies).

Would you also mind outlining your rationale for such projections as to why you expect the US dollar to continue to fall?

Would you accept that if the US dollar strengthens that this may have a dampening effect on the current commodity bull market, or do you think that these are independent, or is there a partial relationship, and if so, what do you think are the salient areas of relevance?  Essentially to what extent do you think the US currency moves are relevant to the price of Zinc?

*US Slowdown?*
What is your view of the current perception of a US economic slowdown (possibly in part caused by the interest rate increases) – if you accept there is a slowdown, do you see this having an impact on the demand for Zinc in any time frame, and if so, what kind or magnitude would you anticipate?

Do you hold the view that the US market is increasingly less important to commodity markets, and that China’s attempt to develop a more cohesive domestic market will ameliorate the effects of a recession or depression in the US should one eventuate?  Essentially to what extent are Zinc prices effected by the US market?



Ok, that should keep you busy for a while!  Sorry to bombard you with so many questions, but I am genuinely interested in your viewpoint and rationale from an F/A perspective.  I am working on my own T/A models, and would appreciate the opportunity to compare and contrast these.

As you know, wavepicker and I both tend to be more chart oriented, and I tend to agree with his position that the market to some extent drives the fundamentals, although I view it as a fluctuating reciprocal relationship with a range of reflexive tipping points (kind of a Soros model as opposed to a classical economic efficient market).  But like all of us, I’m still trying to flesh this out, and it is still evolving…

Also, I was interested in your comments about hedging, why did this knowledge change the way you view commodities out of interest?


Anyway, nice to see you posting, great to see the discussion move to a higher level.


Regards


Magdoran


----------



## barney

Magdoran said:
			
		

> Hi barney,
> 
> 
> Actually my comment was not specifically directed at your post.  I think when I posted my general request for more rigour I hadn’t read your post…
> 
> I am genuinely interested in considering well thought out FA views on Zinc as I am a believer in factoring in fundamentals into my technical analysis.  Sounds odd, but F/A can be helpful at times.
> 
> Hence my request for more in depth comments than some of the linked commentaries which I felt were fairly threadbare when you examined them (although I appreciate Rederob posting up the recent links and will follow them up in due course).
> 
> I also don’t have a problem with negatively slanted comments if they are well thought out, and marshal their thoughts with some rigour.
> 
> Anyway, good to hear you’re having a good run!
> 
> 
> Regards,
> 
> 
> Magdoran




Howdy Mag,  I figured your original post wasn't directed at my post, but I wanted to make my position clear anyway ............ Its funny, but even though I'm relatively new to all this trading stuff etc. I kind of feel it my duty to try and "warn" other "punters" not to make the same mistakes I have/still do      hence my posting a "negative" stance in a raging "bull-zinc" market ....just to keep the "balance" so to speak

I agree that Rederob, W/P,  and others have some great stuff to say on this thread, so keep it coming lads!!   All the best, Barney.


----------



## rederob

Magdoran
I will try to be brief as I am mixing real (paid) work with the pleasure of cricket in the background.

Backwardation:
I only concentrate on the difference between spot and 3 month forward; the spreads further out are for traders to deal with rather than investors.
"Balance" is the natural tendency of a commodity market, and in this balanced market a warehouse profits by buying (holding) inventory today at a price cheaper than it will be sold down the track - or the warehouse goes broke.  This natural tendency is called "contango".
As supplies start to leave the warehouse quicker than it is replenished the balance obviously changes and the warehouse has to profit; doing so by altering the price mix so that immediate departures are priced higher than future departures.  This latter condition of a tight market is called "backwardation", I think because it literally represents a position that is "backward" to the norm, although there might be a more technical explanation.
By tracking the rate of change of spot to 3 month forward you get a good feel for market tightness (or otherwise).  And when you map this against inventory, and corroborate it with global trends you can get a good idea about probable future price movements.
I think anyone trying to just use one or two indicators and hoping for a quick fire solution to making a million is living in a fool's paradise: A holistic approach is essential.
While wavepicker might trust his charts, I can glean a great deal from the trend in spot:futures but do not consider it definitive.
In relation to zinc at present, if the sentiment had changed considerably and quickly we could surmise that market players had thrown in the towel: They clearly have not.
Moreover, the natural tendency of a market going into high backwardation is to attract "spare" metal back into LME warehouses, and this has now happened for zinc: Consider it normative for now.
If we look down the track, and assume nickel to be a year or so ahead of zinc in relation to the "natural" tendencies of commodity markets in tight supply, we will find that backwardations become less relevant, albeit entrenched: The reality is that there is no "spare" metal (nickel) and LME becomes the determinant of ongoing price action by closely examining the volume and location of daily flows of metal.
Magdoran, the specific matter of long dated futures being considerably lower certainly does reflect the present view that there is an expectation that prices will be lower.  However, the reality and the expectation bear little resemblance: You can confirm this by finding the forward prices published 12 months ago, 15 months ago, etc - we are not in territory that was vaguely contemplated back then.  

Currency Impact:
Seriously, way out of my depth!
My observations of global markets over recent years suggest that the USD is going to continue to decline for years to come.
Increasing Chinese trade with eurozone nations does suggest that currency diversification is encouraged, and I believe this will continue to favour an appreciation of the euro over the greenback.
I really can't see what can save the greenback, and would be grateful for contrary views.
I believe that in time our respective dollars will be at parity, and would not have a clue how long it will take, although I suspect more than 3 years would be needed. 
Sorry that I am really not able to give any useful response to your detailed questions in this area.
Although, it is very interesting to note the clear inverse relationship between the greenback and commodity prices.
If I ever get a sense that this will break down, I hope I remember to post on it: The reality is that I expect it to continue for the time being and it remains a reason why I continue to be more bullish than not!

US slowdown:
I think it was the BHP thread where I commented more at length.  I regard the US as relevant to our global view and global trends.  But I regard US relevance as decreasing while Asian relevance increases, particularly in relation to commodities.
Perhaps more importantly I believe we need to acknowledge the growing influence of middle classes in BRIC nations, while at the same time we have Japan and Europe in reasonably sound economic shape.
Can you think of a better time for the US to suffer a slowdown?

Hedging (and in part reply to Barney):
A "hedge" is most simply described as a product that allows a buyer to exercise some future right in order to achieve a degree of financial protection.
The main winners with hedges are the writers of the protection rather than the buyers; a bit like life insurance!
When commodity prices surge, one needs to be on the biggest producers of metals that are selling them into the market without encumbrance.
That's because hedges don't have the capacity to contemplate price surges from bull markets.
Hedges that are below prevailing delivery rates can cost companies millions (perhaps billions in the case of Barrick gold) in foregone revenue.
Phelps Dodge incurred a half billion cost on its "hedges" in the second quarter 2006 alone via contracts set at half the prevailing spot price. 
Some recent examples of hedging contracts that have killed companies are the gold miners Croesus and Sons of Gwalia. 

Hedges are entered into for a variety of reasons.  For new players turning from explorer to producer - who need to borrow money - it is often a requirement that a proportion of production is locked in to a forward price to ensure the lender is repaid.
In some cases a producer might want to have the peace of mind that a proportion of production will give a sound future return and lock in what they believe to be a beneficial price.  They tell shareholders this is a good deal, too!
In other cases a company is approached by a finance institution with complex derivative products or a complex cocktail that defies breaking down by even a good accountant, particularly as maturity dates may overlap for different types of products.
A good business will expose itself to the market and compete on merit.  That is, it knows its products are world class and its costs are at the lower end of the industry benchmark.


----------



## barney

rederob said:
			
		

> Magdoran
> I will try to be brief as I am mixing real (paid) work with the pleasure of cricket in the background.
> 
> Backwardation:
> I only concentrate on the difference between spot and 3 month forward; the spreads further out are for traders to deal with rather than investors.
> "Balance" is the natural tendency of a commodity market, and in this balanced market a warehouse profits by buying (holding) inventory today at a price cheaper than it will be sold down the track - or the warehouse goes broke.  This natural tendency is called "contango".
> As supplies start to leave the warehouse quicker than it is replenished the balance obviously changes and the warehouse has to profit; doing so by altering the price mix so that immediate departures are priced higher than future departures.  This latter condition of a tight market is called "backwardation", I think because it literally represents a position that is "backward" to the norm, although there might be a more technical explanation.
> By tracking the rate of change of spot to 3 month forward you get a good feel for market tightness (or otherwise).  And when you map this against inventory, and corroborate it with global trends you can get a good idea about probable future price movements.
> I think anyone trying to just use one or two indicators and hoping for a quick fire solution to making a million is living in a fool's paradise: A holistic approach is essential.
> While wavepicker might trust his charts, I can glean a great deal from the trend in spot:futures but do not consider it definitive.
> In relation to zinc at present, if the sentiment had changed considerably and quickly we could surmise that market players had thrown in the towel: They clearly have not.
> Moreover, the natural tendency of a market going into high backwardation is to attract "spare" metal back into LME warehouses, and this has now happened for zinc: Consider it normative for now.
> If we look down the track, and assume nickel to be a year or so ahead of zinc in relation to the "natural" tendencies of commodity markets in tight supply, we will find that backwardations become less relevant, albeit entrenched: The reality is that there is no "spare" metal (nickel) and LME becomes the determinant of ongoing price action by closely examining the volume and location of daily flows of metal.
> Magdoran, the specific matter of long dated futures being considerably lower certainly does reflect the present view that there is an expectation that prices will be lower.  However, the reality and the expectation bear little resemblance: You can confirm this by finding the forward prices published 12 months ago, 15 months ago, etc - we are not in territory that was vaguely contemplated back then.
> 
> Currency Impact:
> Seriously, way out of my depth!
> My observations of global markets over recent years suggest that the USD is going to continue to decline for years to come.
> Increasing Chinese trade with eurozone nations does suggest that currency diversification is encouraged, and I believe this will continue to favour an appreciation of the euro over the greenback.
> I really can't see what can save the greenback, and would be grateful for contrary views.
> I believe that in time our respective dollars will be at parity, and would not have a clue how long it will take, although I suspect more than 3 years would be needed.
> Sorry that I am really not able to give any useful response to your detailed questions in this area.
> Although, it is very interesting to note the clear inverse relationship between the greenback and commodity prices.
> If I ever get a sense that this will break down, I hope I remember to post on it: The reality is that I expect it to continue for the time being and it remains a reason why I continue to be more bullish than not!
> 
> US slowdown:
> I think it was the BHP thread where I commented more at length.  I regard the US as relevant to our global view and global trends.  But I regard US relevance as decreasing while Asian relevance increases, particularly in relation to commodities.
> Perhaps more importantly I believe we need to acknowledge the growing influence of middle classes in BRIC nations, while at the same time we have Japan and Europe in reasonably sound economic shape.
> Can you think of a better time for the US to suffer a slowdown?
> 
> Hedging (and in part reply to Barney):
> A "hedge" is most simply described as a product that allows a buyer to exercise some future right in order to achieve a degree of financial protection.
> The main winners with hedges are the writers of the protection rather than the buyers; a bit like life insurance!
> When commodity prices surge, one needs to be on the biggest producers of metals that are selling them into the market without encumbrance.
> That's because hedges don't have the capacity to contemplate price surges from bull markets.
> Hedges that are below prevailing delivery rates can cost companies millions (perhaps billions in the case of Barrick gold) in foregone revenue.
> Phelps Dodge incurred a half billion cost on its "hedges" in the second quarter 2006 alone via contracts set at half the prevailing spot price.
> Some recent examples of hedging contracts that have killed companies are the gold miners Croesus and Sons of Gwalia.
> 
> Hedges are entered into for a variety of reasons.  For new players turning from explorer to producer - who need to borrow money - it is often a requirement that a proportion of production is locked in to a forward price to ensure the lender is repaid.
> In some cases a producer might want to have the peace of mind that a proportion of production will give a sound future return and lock in what they believe to be a beneficial price.  They tell shareholders this is a good deal, too!
> In other cases a company is approached by a finance institution with complex derivative products or a complex cocktail that defies breaking down by even a good accountant, particularly as maturity dates may overlap for different types of products.
> A good business will expose itself to the market and compete on merit.  That is, it knows its products are world class and its costs are at the lower end of the industry benchmark.




Thanks Rederob, Informative post ............... Excuse my questions if they seem amateurish, (but I am an amateur nevertheless!!) ............ As I understand it Zinifex are basically unhedged against the zinc price; therefore, if zinc goes up, ZFX makes "lots" more cash??  Atm, they are in a great position economically ............ my question ........ If at some stage in the future (ie late 2007) ZFX "hedges" their position by taking future price contracts, would that indicate that they felt their position, or the future economic position of zinc pricing may be on the way down ........... and if this were the case, would this be a "good signal" that the SP may be due for short-medium fall? ........... (Obviously I am thinking from a trading as opposed to Investing perspective here) .... Also, if ZFX did start "hedging", would the average "punter" know/find out about it in a reasonable time frame, or are we simply at the mercy of the "price/volume" chart??     Hope these questions make some sense.   Cheers, Barney.

PPS Also, are companies that heavily hedge themselves into the future (such as BHP  on their Uranium prices) actually "shooting themselves in the foot" , unless the market turns Bearish??


----------



## rederob

Barney
ZFX are unhedged.
If they did begin to hedge, it may reflect their view that prices might fall.
If they hedged at near market spot rates the share price might have some degree of protection.
However, if the overwhelming evidence was that longer term the zinc prices would remain lower, then nothing will save the share price.
That said, companies with so much free cash flow have other avenues to consider such as buying into ventures that might ameliorate their zinc position, via diversification into another trending market.
Yes, companies that have hedged their bets on the losing side during this bull market have shot themselves in the foot.
Read what SMY are now trying to do to get their hedge exposure reduced - after announcing how happy they previously were to have locked in such good future prices.
I am not sure if BHP "hedged" their uranium prices.  They may simply have entered into very long term contracts that did not give them much opportunity to take advantage of future upside.
Unlike PDN which appears to have adopted some form of delivery price that is present-market-price related.
A local gold miner that has done OK recently is Equigold, having managed to lock in some forward delivery when the price spiked early this year: By delivering into some spot and hedges they have managed to receive slightly better than average spot prices.
If you are astute, when the commodity bull collapses, hunt for the most heavily hedged producer and buy into their equities when spot prices near their hedge prices.  These companies will "bounce" because their bottom line will not suffer to their extent of their industry peers.


----------



## barney

rederob said:
			
		

> Barney
> ZFX are unhedged.
> If they did begin to hedge, it may reflect their view that prices might fall.
> If they hedged at near market spot rates the share price might have some degree of protection.
> However, if the overwhelming evidence was that longer term the zinc prices would remain lower, then nothing will save the share price.
> That said, companies with so much free cash flow have other avenues to consider such as buying into ventures that might ameliorate their zinc position, via diversification into another trending market.
> Yes, companies that have hedged their bets on the losing side during this bull market have shot themselves in the foot.
> Read what SMY are now trying to do to get their hedge exposure reduced - after announcing how happy they previously were to have locked in such good future prices.
> I am not sure if BHP "hedged" their uranium prices.  They may simply have entered into very long term contracts that did not give them much opportunity to take advantage of future upside.
> Unlike PDN which appears to have adopted some form of delivery price that is present-market-price related.
> A local gold miner that has done OK recently is Equigold, having managed to lock in some forward delivery when the price spiked early this year: By delivering into some spot and hedges they have managed to receive slightly better than average spot prices.
> If you are astute, when the commodity bull collapses, hunt for the most heavily hedged producer and buy into their equities when spot prices near their hedge prices.  These companies will "bounce" because their bottom line will not suffer to their extent of their industry peers.




Thanks Red, Some good info there as always ............ Just a quick follow up .... Is it "public" knowledge when a Co. "hedges", or is that kind of info slow to "hit the streets" so to speak. Thanks.


----------



## rederob

Barney
Companies usually indicate their hedging strategies, and are required to include hedges in their financial reports under AIFRS.
However, I believe "hedges" are operational policies of companies and can be entered into as and when seen fit.
Some companies are lax (not transparent) and don't think too much about their investors' information needs.
Given the recent collapse of CRS due to its poor hedge position its wise to have some idea of the extent that a company hedges, "just in case".
I do not believe that the average person in the steet would get info on a company's hedge position unless it was generally announced to the market. And any insider knowledge may not be an issue if the hedge position is minimal of near-term benign. Companies are not in the business of entering into hedges on the basis it will be bad for their business - it's just that it often turns out that way!


----------



## nizar

barney said:
			
		

> Thanks Red, Some good info there as always ............ Just a quick follow up .... Is it "public" knowledge when a Co. "hedges", or is that kind of info slow to "hit the streets" so to speak. Thanks.




Im just gonna go directly to the short answer here. Public knowledge. It must be disclosed to the ASX (open market). Though it probably wont be in a separate announcement, it would be in, say, the annual report, for example. Nobody reads that 100page book, but as long as its there, ZFX are ok.

Once ZFX start hedging their sp will fall big time. If they hedge and spot zinc prices keep going up, they are effectively losing money ie. the difference btw the hedged price and the spot price PLUS the cost of the hedge.

If they hedge and prices go down, then the market will punish the share price.

If Dugald river comes through by 2010, and century/roseberry exploration yields encouraging results, then increases in mine life and/or zinc production will increase company earnings even if spot prices fall by even 1/3.


----------



## imajica

with ZFX and KZL approaching fair value - people are looking for emerging companies that are relatively cheap. I believe that INL (the only new zinc production this year - coupled with their patented technology) will surge in 2007!


----------



## wizz

I agree that inl with monthly shipments of 5000 to 10000 te is becoming a signifigant zinc player
It seems undervalued but the key question is what would be a fair pe , just on its zinc earnings.There is a lot of talk re their extraction technology for copper,lead,gold etc but that won't impact next years earnings
At a 7 pe the share should be worth 50-60csoon with blue sky upside. The market is only valuing it at 26c despite lots of attempted upramping with talk of cappers etc blurring the picture]

I hold a reasonable number of shares and would appreciate views on the normal pe a company like this should have in say March when shipment reliability is proven


----------



## michael_selway

imajica said:
			
		

> with ZFX and KZL approaching fair value - people are looking for emerging companies that are relatively cheap. I believe that INL (the only new zinc production this year - coupled with their patented technology) will surge in 2007!




*ZFX* - Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 219.9 345.9 255.7 152.8 
DPS 80.0 160.7 106.5 69.0 

*KZL* - Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 16.8 81.4 76.4 64.5 
DPS 0.0 15.0 13.8 24.5 

Do you reckon ZFX is fair value?

thx

MS


----------



## nizar

imajica said:
			
		

> with ZFX and KZL approaching fair value - people are looking for emerging companies that are relatively cheap. I believe that INL (the only new zinc production this year - coupled with their patented technology) will surge in 2007!





ZFX approaching fair value?
Do some research buddy.


----------



## Magdoran

rederob said:
			
		

> Magdoran
> I will try to be brief as I am mixing real (paid) work with the pleasure of cricket in the background.
> 
> Backwardation:
> I only concentrate on the difference between spot and 3 month forward; the spreads further out are for traders to deal with rather than investors.
> "Balance" is the natural tendency of a commodity market, and in this balanced market a warehouse profits by buying (holding) inventory today at a price cheaper than it will be sold down the track - or the warehouse goes broke.  This natural tendency is called "contango".
> As supplies start to leave the warehouse quicker than it is replenished the balance obviously changes and the warehouse has to profit; doing so by altering the price mix so that immediate departures are priced higher than future departures.  This latter condition of a tight market is called "backwardation", I think because it literally represents a position that is "backward" to the norm, although there might be a more technical explanation.
> By tracking the rate of change of spot to 3 month forward you get a good feel for market tightness (or otherwise).  And when you map this against inventory, and corroborate it with global trends you can get a good idea about probable future price movements.
> I think anyone trying to just use one or two indicators and hoping for a quick fire solution to making a million is living in a fool's paradise: A holistic approach is essential.
> While wavepicker might trust his charts, I can glean a great deal from the trend in spot:futures but do not consider it definitive.
> In relation to zinc at present, if the sentiment had changed considerably and quickly we could surmise that market players had thrown in the towel: They clearly have not.
> Moreover, the natural tendency of a market going into high backwardation is to attract "spare" metal back into LME warehouses, and this has now happened for zinc: Consider it normative for now.
> If we look down the track, and assume nickel to be a year or so ahead of zinc in relation to the "natural" tendencies of commodity markets in tight supply, we will find that backwardations become less relevant, albeit entrenched: The reality is that there is no "spare" metal (nickel) and LME becomes the determinant of ongoing price action by closely examining the volume and location of daily flows of metal.
> Magdoran, the specific matter of long dated futures being considerably lower certainly does reflect the present view that there is an expectation that prices will be lower.  However, the reality and the expectation bear little resemblance: You can confirm this by finding the forward prices published 12 months ago, 15 months ago, etc - we are not in territory that was vaguely contemplated back then.
> 
> Currency Impact:
> Seriously, way out of my depth!
> My observations of global markets over recent years suggest that the USD is going to continue to decline for years to come.
> Increasing Chinese trade with eurozone nations does suggest that currency diversification is encouraged, and I believe this will continue to favour an appreciation of the euro over the greenback.
> I really can't see what can save the greenback, and would be grateful for contrary views.
> I believe that in time our respective dollars will be at parity, and would not have a clue how long it will take, although I suspect more than 3 years would be needed.
> Sorry that I am really not able to give any useful response to your detailed questions in this area.
> Although, it is very interesting to note the clear inverse relationship between the greenback and commodity prices.
> If I ever get a sense that this will break down, I hope I remember to post on it: The reality is that I expect it to continue for the time being and it remains a reason why I continue to be more bullish than not!
> 
> US slowdown:
> I think it was the BHP thread where I commented more at length.  I regard the US as relevant to our global view and global trends.  But I regard US relevance as decreasing while Asian relevance increases, particularly in relation to commodities.
> Perhaps more importantly I believe we need to acknowledge the growing influence of middle classes in BRIC nations, while at the same time we have Japan and Europe in reasonably sound economic shape.
> Can you think of a better time for the US to suffer a slowdown?
> 
> Hedging (and in part reply to Barney):
> A "hedge" is most simply described as a product that allows a buyer to exercise some future right in order to achieve a degree of financial protection.
> The main winners with hedges are the writers of the protection rather than the buyers; a bit like life insurance!
> When commodity prices surge, one needs to be on the biggest producers of metals that are selling them into the market without encumbrance.
> That's because hedges don't have the capacity to contemplate price surges from bull markets.
> Hedges that are below prevailing delivery rates can cost companies millions (perhaps billions in the case of Barrick gold) in foregone revenue.
> Phelps Dodge incurred a half billion cost on its "hedges" in the second quarter 2006 alone via contracts set at half the prevailing spot price.
> Some recent examples of hedging contracts that have killed companies are the gold miners Croesus and Sons of Gwalia.
> 
> Hedges are entered into for a variety of reasons.  For new players turning from explorer to producer - who need to borrow money - it is often a requirement that a proportion of production is locked in to a forward price to ensure the lender is repaid.
> In some cases a producer might want to have the peace of mind that a proportion of production will give a sound future return and lock in what they believe to be a beneficial price.  They tell shareholders this is a good deal, too!
> In other cases a company is approached by a finance institution with complex derivative products or a complex cocktail that defies breaking down by even a good accountant, particularly as maturity dates may overlap for different types of products.
> A good business will expose itself to the market and compete on merit.  That is, it knows its products are world class and its costs are at the lower end of the industry benchmark.



Thanks rederob,


That is an interesting interpretation of backwardation.  I follow crude oil futures a lot, and noticed the prices were contango during the recent correction in crude, where the spot prices continued to fall noticeably while the contracts were contango.

Oddly I thought backwardation was supposed to signal that the market perceived that there is a shortage of the underlying commodity.  However, through recent observation I have found both conditions with many commodities often did not reflect the price action of the spot market.

My question in part is along this line of thinking that the backwardation in Zinc seemed odd to me.  Not being a specialised Fundamental analyst in the Zinc market, I was hoping to glean some more about the nuances of the futures contracts behaviour, and tie it in with the broader market supply and demand imperatives.

I still don’t understand what is driving the Zinc price other than a rudimentary understanding of steel demand/construction, and other industrial uses, and the international context from a broad macro economic view point.

While it’s clear that there is hedging and speculation going on, what do you think the mix is currently – more speculative, or more hedging going on, or a balance of the two.  What is the consequence of this mix given an Ameranth scenario?

Re your comments on US influence in Asia, I am currently more persuaded by this line of thinking, seeing a more diversified currency/economic outlook emerging.

Regarding hedging, as you know this is a field I am interested in, so I was curious as to how your understanding of hedging techniques, and the broader use of these techniques in the commodities you are involved in altered your approach.  Essentially, what did you glean, and how did this reshape your analysis?

Just out of interest, do you know which zinc producers here are hedged?  While I’d love to find the time to do my own research, I’m not an F/A player, and would appreciate any suggestions you have.

Re the USD, interesting viewpoint.  I have a variety of models in play here.  There seems to be an orthodox view with many of the Australian currency analysts that most do not expect the AUD to climb much higher than 0.80 US, and that it is likely that the AUD will swing back lower in the near future.

Long term movement of the US currency down is certainly plausible if the current global economic structures continue in the current direction. 

Once again, thanks for making the effort, much appreciated.


Regards


Magdoran


----------



## barney

Howdy Mag, 

You and Red should generate some interesting questions and answers here ........... From a very basic perspective I'd just like to add a couple of things I've noticed re ZFX (zinc) ................ 

Firstly, as far as I am aware ZFX is basically "unhedged" re the price of ZInc ........... Yesterday, base metals basically dropped, yet on news of their proposed new mine (2008) ZFX SP went up. Today, base metals relative to ZFX rose a little (Zinc and Lead) yet ZFX fell from its open to close nearer its low for the day (4 out of 5 days now)  ...... 

Imo ZFX is the type of stock that (at times) gets "worked over" by the "smart money" , and the fundamentals often don't seem to stack up (in the short term trading scenario that is ..... In the longer term I'm sure that will be totally different/normal) ........ 

I guess what I'm saying is that even though the fundamentals might be 95% in favour of a stock like ZFX increasing atm, the market in general is always subject to outside/inside factors which make it hard to predict what the share price will do ............. 

As traders (particularly new ones like myself) we all obviously need to keep a balanced/open perspective of what stock prices are doing, regardless of our opinion/personal perception is, so that we don't get lulled into the idea that a given stock is a "sure thing" ................ 

My comments are simply for the "novice" investors like myself ........... Be studious, and don't take any comments as "gospel" ..... Nothing about the markets is cut and dry ..... Cheers, Barney.


----------



## rederob

Magdoran said:
			
		

> Thanks rederob,
> 
> 
> That is an interesting interpretation of backwardation.  I follow crude oil futures a lot, and noticed the prices were contango during the recent correction in crude, where the spot prices continued to fall noticeably while the contracts were contango.
> 
> Oddly I thought backwardation was supposed to signal that the market perceived that there is a shortage of the underlying commodity.  However, through recent observation I have found both conditions with many commodities often did not reflect the price action of the spot market.
> 
> My question in part is along this line of thinking that the backwardation in Zinc seemed odd to me.  Not being a specialised Fundamental analyst in the Zinc market, I was hoping to glean some more about the nuances of the futures contracts behaviour, and tie it in with the broader market supply and demand imperatives.
> 
> I still don’t understand what is driving the Zinc price other than a rudimentary understanding of steel demand/construction, and other industrial uses, and the international context from a broad macro economic view point.
> 
> While it’s clear that there is hedging and speculation going on, what do you think the mix is currently – more speculative, or more hedging going on, or a balance of the two.  What is the consequence of this mix given an Ameranth scenario?
> 
> Re your comments on US influence in Asia, I am currently more persuaded by this line of thinking, seeing a more diversified currency/economic outlook emerging.
> 
> Regarding hedging, as you know this is a field I am interested in, so I was curious as to how your understanding of hedging techniques, and the broader use of these techniques in the commodities you are involved in altered your approach.  Essentially, what did you glean, and how did this reshape your analysis?
> 
> Just out of interest, do you know which zinc producers here are hedged?  While I’d love to find the time to do my own research, I’m not an F/A player, and would appreciate any suggestions you have.
> 
> Re the USD, interesting viewpoint.  I have a variety of models in play here.  There seems to be an orthodox view with many of the Australian currency analysts that most do not expect the AUD to climb much higher than 0.80 US, and that it is likely that the AUD will swing back lower in the near future.
> 
> Long term movement of the US currency down is certainly plausible if the current global economic structures continue in the current direction.
> 
> Once again, thanks for making the effort, much appreciated.
> 
> 
> Regards
> 
> 
> Magdoran



Magdoran
Oil I follow, but you make an interesting point about its contango and I admit that I have never even bothered to look at it.
For example, US refiners have to manage the mix between gasoline, diesel, heating oil and the many other variants on both a day to day and medium term (ie 2-3month) time frame.  US refiners simply do not have the capacity to store crude or refined product for any length of time: For all intents and purposes we could look at it as "just in time" inventory management.
This is markedly different from metal commodities that can be dumped in large warehouses for many years quite safely and without deterioration - just a relatively small storage cost.

Regarding zinc, your understanding is probably as good as it needs to be, and is pretty well on the money.
The extent that speculation or fundamental demand drives the prices is about as well known for zinc as it is for any other market sector: We know the "longs" are presently in control, and demand for actual metal is firm so does that just mean the longs are "comfortable".  More importantly, I don't know if it is the speculators that keep bidding up the price on the assumption they are on a winning bet, or whether it is first the consumers who MUST have the metal and need to outbid the speculators in order to ensure they have a physical commodity to keep their factories running: Perhaps it's both and the order is not important - I do not know.
On the opposite side of the equation, we do know that any downside to zinc is presently the result of speculators reducing exposure as consumers simply do not have that luxury while the market is so tight.  Another way of thinking about it is if you were a consumer and decided to sell into the tight spot market to take advantage of backwardations, thinking you could buy back in more cheaply because you could "collapse" the price enough to profit from the buyback. Consumers are business people, and running the business demands you have access to physical supply.  So the above scenario is more akin to a gambler's logic or a game of Russian roulette - where the odds could be a killer!

I think if you really want to see what "speculation" is doing/can do to a metal market, you just need to keep watching what is presently happening to copper.  The "shorts" are in control at the moment, but copper is consistently being bid up whenever it drops under US$3/lb.  The bears and bulls are playing a game of "first to blink", but they start a new game every day, rather than see it as a test match.
Perhaps the most interesting aspect of copper's price action is the reducing spread between spot and 27 month forward prices: Not just because of "contraction" in the average spread, but because the underlying implication is that metal prices will stay higher for longer.

In relation to hedging techniques, I am definitely not a person who can offer advice.  However, as an investor, I have a general understanding of the impact of the application of various hedging instruments, and at the end of the day it is the "application" rather than the strategies that we are dealing with when making our minds up on whether or not to buy.
That said, all hedging does is give a company peace of mind because they believe they have achieved some degree of financial certainty. The reality is that if the assumptions for their hedges undergo significant change, their positions can cause financial pain rather than gain. Long-dated hedges are a recipe for disaster in my book and companies that lock themselves into such arrangements need to be looked at cautiously.  Kagara Zinc is unhedged on zinc output but has hedges ("collars") on a portion of its copper production. The price collars reduce each year, and are supported by a floor price (which is set at a level which at least will give rise to a profit on today's cost margins). The problem we have is that in 2 or 3 years time, if copper prices remain near present levels, then KZL will forego substantial profits by being "collared".  
Another, worse, problem with hedges is encountered if there is a failure to deliver.  In this regard you can review what has happened to Croesus.  Inadequate disclosure and statements from the company suggested their hedging position could be adequately accommodated - I recall they used some statement suggesting only 30% of reserves were hedged.  That's all good and well but it did not say that it was not actually possible to mine the required amount from the "reserve base", and that default was imminent!
I guess the lesson with hedging is to gain an understanding of both the future price impacts AND the extent that forward production is locked into hedges.
In relation to how "hedging" impacts on my decisions: I adopt the very simple approach of only investing in the least hedged producers of the greatest output and lowest cost - and occasionally have to make some compromise on other factors such as prospectivity.

In relation to the strength of the AUD versus the USD (and therefore future direction), my views are based mainly on the ongoing debasement of the greenback by the Federal Reserve to "manage" inflation.
Whereas, in Australia the RB has a greater focus on policies that reduce unemployment: Interest distinctions.
Putting that aside though, I think our dollar's strength will be enhanced by its capacity to trade commodities with Asia, while America's dollar will decline further as other nations continue to realise that what is backing the greenback is "debt" - a debt they might continue not be willing to perpetuate!


----------



## wizz

Hmmmmmmmmmm   ZFX or INL???? Or both



> Myra Saefong's Commodities Corner
> Zinc supplies are quietly running out
> 
> By Myra P. Saefong, MarketWatch
> Last Update: 7:49 AM ET Dec 15, 2006
> 
> SAN FRANCISCO (MarketWatch) -- It's zinc's turn to shine.
> Spot prices for high-grade zinc have more than tripled on the London Metal Exchange in the last two years -- and the price rally won't likely end soon with demand for the industrial metal far outpacing supplies, analysts said.
> After many years of languishing at low levels caused by abundant supplies, spot prices for high-grade zinc climbed to over $4,400 per metric ton as of Wednesday on the LME -- up almost 270% from 2004's levels.
> That's quite a change for the metal that's mostly used to coat steel and to act as a rust inhibitor.
> 
> "Zinc has been perhaps the worst investment in major metals during the past several decades, which has resulted in significant underinvestment in exploration," said Dr. Harlan Meade, president and chief executive officer of both Pacifica Resources Ltd. (CAAX: news, chart, profile) and Yukon Zinc Corp. (CA:YZC: news, chart, profile).
> 
> "The addition of several large mines in the mid 1990s simply flooded the market with zinc," he said.
> 
> New zinc output, in part, was made possible because of byproduct credits such as copper and silver that sometimes provided enough added revenue to offset zinc prices that really weren't high enough to encourage exploration or development, he said.
> 
> Now the zinc market faces a supply deficit, "caused by the depletion of many of our large mines," Meade said.
> 
> Exacerbating the problem, China, "who dumped zinc on the market during the 1980s and 1990s, became a net importer of the metal in 2003 as the country's consumption took off," he said.
> 
> China's influence
> Indeed, China's zinc demand has been "rising at an amazing rate," said Eric Coffin, co-editor of HardRockAnalyst.com, which offers publications focused on resource stocks.
> 
> He blamed "extremely high capital investment growth," much of which is centered on construction, for the increase in Chinese consumption, which climbed 35% between 2003 and 2005.
> 
> "Zinc is a pretty basic industrial material," said Lawrence Roulston, editor of Resource Opportunities. "Most consumers would not even be aware that they come in contact with it many times a day," he said, pointing out that a typical car uses about 22 pounds of zinc.
> 
> "Car makers will pay whatever they need to pay to get enough zinc to keep making cars," he said, and "an extra dollar on the zinc price will not reduce demand for cars."
> 
> Similarly, demand won't slow even if "couple of tens of bucks" is added to the cost of a new house because of the zinc used in galvanized steel for construction, he said.
> 
> The recent run in the zinc price has "demonstrated ... the critical shortage of metals supply coming from the mining industry," said Roulston. "There are many small new mines constantly being developed, but no big mines."
> Meanwhile, "mines are constantly being shut down as the ore bodies are depleted, [so] the net result is that production has been flat at a time of rising demand," he said.
> 
> Overall, the zinc industry will "have a hard time at any price bringing on enough new supply to balance supply and demand in 2010 and thereafter," Meade said.
> 
> Eating up supply
> Against that backdrop, warehouse stocks of zinc have been depleted.
> On the LME, supplies were down to around 85,750 metric tons as of early December -- down from 450,000 a year ago and close to their lowest level since March 1991, according to Martin Hayes, a senior correspondent at London-based BaseMetals.com.
> 
> And inventories are "set to keep on falling," he said.
> 
> The supply deficit this year will likely be close to 300,000 metric tons, he said, with supply of 6.8 million metric tons not enough to satisfy 7.1 million metric tons of consumption.


----------



## wavepicker

rederob said:
			
		

> A more reliable chart to compare zinc against is that of copper a year ago, or of nickel, but certainly not one of gold.
> These are commodities that zinc is paralleling on a "lagged" basis.




Hi Rederob, when comparing these charts was doing so in terms of wave structure and patterns of the trend. Don't even care what commodity,stock, index etc the chart is representing!! Primarily was looking at the final sideways consolidation(wave 4) that was similiar in the Gold chart back then to Zinc now. These types of patterns precede a final blow off to a new high(wave 5) which is where zinc is now(wave 5 terminal). If I have seen these patterns once then I have seen them 100 times in financial charts.

When considering these patterns one thinks in terms of probabilities and risk reward.

As for zinc lagging all the other metals, all the more reason it will correct as expected in 2007 back to 3000-3500, as the other metals such as copper are looking technically weak ATM on the price charts



			
				rederob said:
			
		

> However, I present my views on zinc based on fundamental drivers that are well in place and only likely to change in the medium term if there is a substantial change to global markets.  Typically my successes are within an 80% probability range.




As mentioned in earlier posts, fundemental drivers generally lag the psychological trends in place that can be seen in charts. 
I see a rise in the USD next year, not withstanding commercial fundementals this will generally negative on metals and foreign currencies.

Have a great xmas


----------



## rederob

wavepicker
You have a great Xmas too.
Appreciate all the comments.
I look at charts a lot, but charts in combination rather than in isolation.
I look at the "waves", the trends, the "indicators" and the the very long term price patterns for possible clues.
In the case of zinc the highest probability for the price in the medium term is a new high.
What is now occurring is a well earned consolidation for the metal.
It will probably be this time next year before we seriously get a pivot that will see zinc do what copper is presently doing.
But on the basis I am 20% wrong, there is always that consideration!
Good luck to those who continue to hold ZFX and KZL.
Into 2007 there are only two other metal picks - in preference, uranium, and then nickel (although nickel will find it hard to do stellar things given its 160% increase this year).
Although copper came and went (rising over 170% year on year to its May price peak) it is definitely not "collapsing", as many have feared.


----------



## rederob

wavepicker
I didn't comment on your AUD/USD view: But I think it is a brave call.
If you are right then I think my commodity boom scenario will have gone up a gear.
I see a very mixed bag for commodities next year.
I think the greeenback is a basket case in need of a new weaver.


----------



## wavepicker

rederob said:
			
		

> wavepicker
> I didn't comment on your AUD/USD view: But I think it is a brave call.
> If you are right then I think my commodity boom scenario will have gone up a gear.
> I see a very mixed bag for commodities next year.
> I think the greeenback is a basket case in need of a new weaver.




Hi Rederob, perhaps you may have misinterpreted the coment ont he USD. My call is for the USD to rise against AUD, GBP, EUR, YEN etc next year. Not the other way round

Appreciate and enjoy reading your fundemental analysis on Commodoites as well. I wish I had more time to research these as well, but don't that is why prefer the chart reading at present as this is quicker if you recognize the patterns when they are there.

I see this correction next year as correction/pause in a secular bull. If you have the nerve to hang on over the long term(most people get too emotional and don't), then this should not worry.  I like to trade move my move. That is why with regard to Gold I expected a 1-2 year correction back in April. I think a trememdous opportunity will arise when that correction finally ends, but at present there is insufficient evidence that that correction has ended, as such will stick to the bearish case for now until it becomes invalidated. As for zinc, well a correction back to 3000 is on the cards thereafter will review again for the bullish case.

Cheers


----------



## rederob

Cheers wavepicker.
My logic on your post is that if the USD is higher next year, it will imply that present economic sluggishness has been mitigated.
That would likely also imply that auto and housing markets were back to normal.  In turn causing a marked pickup in base metal demand, especially copper.
I agree with your view on gold.
I don't think zinc has a chance in hades of getting back to $3000 within 12 months.
Let the passage of time reveal all!


----------



## wavepicker

rederob said:
			
		

> Cheers wavepicker.
> My logic on your post is that if the USD is higher next year, it will imply that present economic sluggishness has been mitigated.
> That would likely also imply that auto and housing markets were back to normal.  In turn causing a marked pickup in base metal demand, especially copper.
> I agree with your view on gold.
> I don't think zinc has a chance in hades of getting back to $3000 within 12 months.
> Let the passage of time reveal all!




Time will certainly do so rederob, quicker than ya think

as a parting note please refer to the ZFX chart, doesn't get much clearer than that. 
-A 5th wave finishing off 3 degrees of trend
- A contracting triangle as 4th(When these occur in a 4th wave position, they always precede the last actionary wave in an impulse)
-An ending diagonal pattern (that ended as a truncation) to finish that last fifth wave blowoff out of the triangle 4th wave.

Yesterday was a down day, look at the volume spike. There are sellers in this market!! This chart is almost identical to that of that of Zinc from the LME site

Cheers


----------



## michael_selway

rederob said:
			
		

> Into 2007 there are only two other metal picks - in preference, uranium, and then nickel (although nickel will find it hard to do stellar things given its 160% increase this year).
> Although copper came and went (rising over 170% year on year to its May price peak) it is definitely not "collapsing", as many have feared.




Uranium, zinc, nickel for 2007 yep i agree

Red do u think Oil will stay steady, drop, or skyrocket in 2007?

Wavepicker, looking at the chart, theres is atleast another uptrend wave before any big fall, more likely 2

thx

MS


----------



## wavepicker

michael_selway said:
			
		

> Wavepicker, looking at the chart, theres is atleast another uptrend wave before any big fall, more likely 2
> 
> thx
> 
> MS




Hello Michael, interesting point you make about another 2 legs up. What is this opinion and conclusion based on??

Even if that is the case, it is a higher probability scenario that prices may revisit $15 before moving higher. Refer to the proprietry tool below based on Cycles Analysis. This is a leading indicator. Basically what we have is a trend as represented by the pink nominal line, price, and upper and lower boundaries. At a first glance these may represent a modified BB. But it is nothing like a Bollinger Band as there is no lag like in a MA.  Price oscillates (vibrates) like a sine wave(although not periodic) about the pink nominal trend line. As can be seen price action is contained within 97% of the upper and lower channels. When price reaches an extreme, usually at the zone of the upper and lower boundaries of the channels it thus only has a 1-3%probablilty of staying at(or beyond) that level before correcting at least back to the nominal pink line or even to the other channel extreme. Because this is a high probability scenario, when combined with EW, we can eliminate any ambiguous wavecounts and only concentrate on 1-3 scenarios. As such we can also come up with the most probable wave structures that may follow.

Cheers


----------



## rederob

MS
I think oil is a "hold" for now.
OPEC will determine direction through 2007 unless we get a Gulf hurricane doing a Katrina (usually in the 3rd quarter for such an event) or get some geopolitical rumblings from North Korea or Iran between times.
I think by 2008/2009 the "natural" growth of oil demand will outstrip capacity to supply and peak oil will begin to spike oil to greater highs than we can presently imagine.
Don't forget that there is still a massive amount of oil in the world, but it's getting harder to extract in volume and certainly get more expensive to lift every year.

wavepicker
seeing you have been kind enough to focus on the future with your chart, I will tell you that my thoughts place zinc over $5000 in March/April.  I see this present consolidation ending by mid-January and the US market (via New Orleans' warehouse drawdowns) revitalising zinc's price.
It is my firm view that China is taking full advantage of present (comparatively) high backwardations to profit via deliveries to LME Singapore.
However, consumer destocking, which is a theme heading towards end of year, should come to an end in January and we should begin to see zinc drawdowns resume on an ongoing basis, although not at the heady levels we saw in 2006 - simply because the backwardation will do to zinc consumers what it has done to nickel consumers; convert them into hand-to-mouth survival mode.


----------



## wavepicker

rederob said:
			
		

> wavepicker
> seeing you have been kind enough to focus on the future with your chart, I will tell you that my thoughts place zinc over $5000 in March/April.  I see this present consolidation ending by mid-January and the US market (via New Orleans' warehouse drawdowns) revitalising zinc's price.
> It is my firm view that China is taking full advantage of present (comparatively) high backwardations to profit via deliveries to LME Singapore.
> However, consumer destocking, which is a theme heading towards end of year, should come to an end in January and we should begin to see zinc drawdowns resume on an ongoing basis, although not at the heady levels we saw in 2006 - simply because the backwardation will do to zinc consumers what it has done to nickel consumers; convert them into hand-to-mouth survival mode.





rederob, I respectfully disagree with your $5000 zinc price by march/April. It is a low probability outcome. 

Please refer to the chart below. It is that of another company frequently discussed on ASF. Buy and holders of this stock are looking for fundemental reasons why this has capitulated. My take is it would have tanked it anyway. It does not matter what business this company is involved in. Now how could we have known this stock price was gona tank it. Easy, we counted to 5!  

This same pattern is currently apparent in Zinc, ZFX, and possibly developing the XAO at the moment.

I think there is a fair chance we will see 3000 in Zinc before 5000

Cheers


----------



## chops_a_must

wavepicker said:
			
		

> Please refer to the chart below. It is that of another company frequently discussed on ASF. Buy and holders of this stock are looking for fundemental reasons why this has capitulated. My take is it would have tanked it anyway. It does not matter what business this company is involved in. Now how could we have known this stock price was gona tank it. Easy, we counted to 5!
> 
> This same pattern is currently apparent in Zinc, ZFX, and possibly developing the XAO at the moment.
> 
> I think there is a fair chance we will see 3000 in Zinc before 5000
> 
> Cheers



Does the end of the 5th wave automatically mean free fall?


----------



## wavepicker

chops_a_must said:
			
		

> Does the end of the 5th wave automatically mean free fall?





Hi Chops,

not necassarily, sometimes the market corrects slightly makes an unorthodox new high slightly above the 5th and then falls impulsively. However because zinc has completed an Ending Diagonal pattern( ie a small wedge) at the end of the 5th wave, chances are that the pattern that falls will initially be a sharp reversal of some type. There are quite a few scenarios probable. 
There are no guarantees however, that is why we must place protective stops with every position.

Will be interesting to see how this works out


----------



## chops_a_must

I'm confused as to what could actually drive such a down trend in ZFX. Not that it really bothers me much, except providing more buying opportunities. Just seems every time Nickel and Zinc dives, it bounces. Although I'm not expecting Nickel or Zinc prices to go that much higher, I can't see it crashing like you have predicted. There would have to be some kind of unforeseen event or change before I could accept your negative outlook.

As others have noted in the ZFX thread, it is a notoriously hard stock to analyse. Defies rules and expectations, and bounces off important resistance points. Having said that, I wouldn't be surprised to see it in the 15's again in the short term, seems to get heavy buying there.

But with ZFX, I think you need to look at intraday charts as well. Because even on days where it does dive, it doesn't close on lows, and buyers come in as soon as it is sold off.

Not that any of this is expert opinion or anything, just what I have noticed.


----------



## Fab

wavepicker said:
			
		

> rederob, I respectfully disagree with your $5000 zinc price by march/April. It is a low probability outcome.
> 
> Please refer to the chart below. It is that of another company frequently discussed on ASF. Buy and holders of this stock are looking for fundemental reasons why this has capitulated. My take is it would have tanked it anyway. It does not matter what business this company is involved in. Now how could we have known this stock price was gona tank it. Easy, we counted to 5!
> 
> This same pattern is currently apparent in Zinc, ZFX, and possibly developing the XAO at the moment.
> 
> I think there is a fair chance we will see 3000 in Zinc before 5000
> 
> Cheers



I am not a chartist but I have to say I don't quite understand the reasoning behind the fifth wave thing and why that means a free fall  
So I believe on wednesday we will have a sharemarket correction but mainly because of what happened in America overnight.


----------



## wavepicker

chops_a_must said:
			
		

> I'm confused as to what could actually drive such a down trend in ZFX. Not that it really bothers me much, except providing more buying opportunities. Just seems every time Nickel and Zinc dives, it bounces. Although I'm not expecting Nickel or Zinc prices to go that much higher, I can't see it crashing like you have predicted. There would have to be some kind of unforeseen event or change before I could accept your negative outlook.
> 
> As others have noted in the ZFX thread, it is a notoriously hard stock to analyse. Defies rules and expectations, and bounces off important resistance points. Having said that, I wouldn't be surprised to see it in the 15's again in the short term, seems to get heavy buying there.
> 
> But with ZFX, I think you need to look at intraday charts as well. Because even on days where it does dive, it doesn't close on lows, and buyers come in as soon as it is sold off.
> 
> Not that any of this is expert opinion or anything, just what I have noticed.




Dunno if you could describe what I think will happen to Zinc/ZFX as a crash. A correction and a possible short lasting say 6 months possibly 1 year would be more accurate a description.  But that also depends on what one classes as a correction or a crash!!
That would probably mean a move back down to 12 bucks. After that is anybodies guess. 

All the same just my thoughts.
As for unforeseen events, well anything is possible, but all it takes is a change in mass psychology/social mood to change a trend. 

Cheers


----------



## wavepicker

Fab said:
			
		

> I am not a chartist but I have to say I don't quite understand the reasoning behind the fifth wave thing and why that means a free fall
> So I believe on wednesday we will have a sharemarket correction but mainly because of what happened in America overnight




Hi Fab,

Rather than freefall, let just say a "mirror image foldback" move (which in itself is quite a move) of the last major leg up from August, because that's how long I think it will take to complete that correction.

Cheers


----------



## michael_selway

wavepicker said:
			
		

> Hi Fab,
> 
> rather than freefall, let just say a "mirror image foldback" move(which in itself is quite a move) of the last major leg up from August, becuase that's how long I think it will take to complete that correction
> 
> Cheers




For some reason I just dont think that will happen, $17+ lowest, zinc and zinc shares are going up higher very soon.

thx

MS


----------



## rederob

wavepicker
As we both are tackling the same issue from a different perspective, and with different views on the outcome, we will need the market to "judge" us.
I continue to buy at times when others are selling, although am not going to be buying any more zinc equities as I think my total exposure now is around $400k.
I am somewhat ahead having got in early, but am not averse to folding when the fundamental evidence is conclusive: Even with copper the evidence is not yet conclusive, but the warning signs have been suggesting "keep clear" for some time.
The fundamental difference between zinc and copper is that copper has had significant new greenfield (eg Spence) and brownfield capacity come on stream recently.  Yet despite this copper inventories are rising at a measured rather than rapid pace.
On the other hand, zinc has some brownfield capacity additions, but no greenfield expansions of any significance.   Additionally, whereas copper is facing a bleak future in the US due to housing and car sales declining, steel output globally is set to continue apace and zinc's future is riding on that.
Zinc's metal inflows remain occasional dumpings from China into Singapore's LME warehouse - not a signal for the bears to raise their glasses......yet!
Cheers


----------



## wavepicker

Enough said from me on this thread for now.

I respect your both of your views on this topic and you sound like you know your stuff when it comes to fundematals of metals and miners in general.

Don't mean to be a thorn in any way, just expressing my opinion on TA based on previous experience. If I had this knowledge 6.5 years ago in the dot.com bubble I could have saved $150K in paper profits evaporating quite quickly!

Have a great xmas

Cheers


----------



## michael_selway

wavepicker said:
			
		

> Enough said from me on this thread for now.
> 
> I respect your both of your views on this topic and you sound like you know your stuff when it comes to fundematals of metals and miners in general.
> 
> Don't mean to be a thorn in any way, just expressing my opinion on TA based on previous experience. If I had this knowledge 6.5 years ago in the dot.com bubble I could have saved $150K in paper profits evaporating quite quickly!
> 
> Have a great xmas
> 
> Cheers




NP & same for you

http://www.theglobeandmail.com/servlet/story/RTGAM.20061221.wcommodities1221/BNStory/Business/home



> *Uranium, zinc seen as top performers for 2007*
> ANGELA BARNES
> 
> Globe and Mail Update
> 
> Uranium, which has posted the third-best gain among Canadian commodities this year, will likely take the top spot on the performance chart in 2007, according to commodities expert Patricia Mohr, vice-president of Scotia Economics.
> 
> She expects spot uranium prices will average $80 (U.S.) a pound through 2007 but end the year at close to $90. That is up from an average $48.10 this year and a low of only $7.10 in late 2000. Ms. Mohr explained that the rise in uranium reflects a secular change in global energy markets, brought on in part by the shift by utilities from high-priced fossil fuels to nuclear power, rather than a cyclical upswing.
> 
> “Nuclear power generation emits virtually no greenhouse gases ”” another factor attracting interest in countries such as China,” she said in the latest monthly report on the Bank of Nova Scotia's commodity price index.
> 
> Zinc is Ms. Mohr's other top pick for 2007. Inventories of zinc on the London Metal Exchange have plunged by 78 per cent since late 2005, which has pushed prices of the metal to a record $2.10 a pound on Nov. 24. “Zinc is likely to move even higher in the first half of 2007 before significant mine expansion begins to trim prices in late 2007 and in 2008,” she said.
> 
> She sees the metals and minerals retaining their leadership position among commodities, but also anticipates that precious metals, especially silver, will benefit from further weakness in the U.S. dollar.
> 
> Furthermore, “potash fertilizer should yield good gains for investors,” she added. “Wheat, barley and canola should also perform quite well relative to past experience, linked to new demand for ethanol additives in gasoline and biodiesel,” she said.
> 
> Nickel was the best performer among the 32 commodities included in the commodity price index in 2006, climbing 159 per cent over the year. LME nickel prices surged to a record $16.08 a pound a week ago, buoyed by news that BHP Billiton Ltd.'s Ravensthorpe project in Australia will not come on stream until 2008 and that Inco Ltd./Companhia Vale do Rio Doce's Goro mine in New Caledonia will be delayed until late 2008. That raised concerns about supply in a time of robust global demand.
> 
> Ms. Mohr expects a “supercycle” in nickel, with prices remaining strong through 2008.
> 
> Ms. Mohr sees crude oil prices declining only modestly in 2007 from current levels. She expects the West Texas intermediate crude price will average $60 a barrel next year, which compares with an average of $66 this year and $56.56 in 2005.
> 
> The Scotia commodity price index rebounded in November, jumping 7.7 per cent from October, after declining 4.2 per cent in October and 3.3 per cent in September. That left the index, which measures price trends in Canada's major commodity exports, up 4.3 per cent from a year earlier and near its May record.
> 
> The oil and gas index increased in November as Canadian natural gas export prices recovered sharply from an oversold position relative to residual fuel oil.
> 
> Crude prices also edged higher. So far in December, they have averaged more than $62, up from the $59.40 in November and $59.14 in October.
> 
> The metal and mineral index soared to a record last month, the second record in as many months. Meanwhile, the forest products index inched higher and the agricultural products advanced in the face of surging canola prices.


----------



## YOUNG_TRADER

Some excellent high quality posting Wave and Redrob,

Will be interesting to see who's analysis was correct, I agree and am of the same view as Red, however am interested in Waves 5 wave chartist analysis,

Time will tell gents


----------



## chops_a_must

wavepicker said:
			
		

> Hi Chops,
> 
> not necassarily, sometimes the market corrects slightly makes an unorthodox new high slightly above the 5th and then falls impulsively. However because zinc has completed an Ending Diagonal pattern( ie a small wedge) at the end of the 5th wave, chances are that the pattern that falls will initially be a sharp reversal of some type. There are quite a few scenarios probable.
> There are no guarantees however, that is why we must place protective stops with every position.
> 
> Will be interesting to see how this works out



Where to from here? ZFX bounced from below 18 again.


----------



## machi

Some good posts here, keep them up.

Chops are must,

Perhaps give the market some more time(like a few weeks) to show what it wants to do, before passing judgement


----------



## jschlieff

I don't think it has been mentioned previosly, but an important factor for analysing the strength of zinc stocks for the coming year is the direction of TC and price participation ie the main revenue source for zinc smelters. 

A little about me first. I am spending a fair amount of time analysing the direction of TC, PP and the payables portion or 'free metal' component. 

We gather that the amount payable to zinc smelters to refine zinc concentrate can be understood below. This equation signifies the amount of revenue which zinc smelters receive based on the current spot price of zinc. Every year, a base level for pp is negotiated and currently this stands at USD1400, however my research is suggesting that this will rise above USD2800 given the short-term direction of the zinc price. I am also forecasting that the base tc will increase given the decreased floating portion provided to smelters as a revenue source. 

Realized TC = Base TC + (Spot Zinc Price – USD1400) x 14% 

Another important factor to consider is the free metal component where presently, zinc smelters only pay for 85% of the zinc contained within the concentrate delivered by miners due to contract negotiations which take into account production losses etc. However miners are well aware that smelters are able to retrieve up to 97% of the zinc, hence they are essentially receiving free zinc. 

I am forecasting that this payables portion will also increase substantially to around 93% given enhanced metallurgical extraction technology. 

Given my forecasts and the research I am expecting that 2007 will be quite a bad year for zinc smelters compared to 2006 given these factors, even though the zinc price is expected to continue to rise in the short-term and then soften as supply increases. 

2007 on the otherhand, will be quite a lucrative year for miners, but only i the short-term as major zinc mine expansion projects being to take effect throughout 2007 such as:

- San Cristobal
- Dairi
- Golden Grove

I am expecting 2007 to be quite a good year for zinc stocks, however keep in mind this is just my opinion and is not substantiated by a CFA or AICPA qualifications. 2006 has been an exceptional year for zinc smelters such as Korea Zinc, but I am forecasting that next year we will not see the same results.

Just my first contribution to this forum, I hope it has provided some food for thought in the upcoming trading year.

Regards,

James Schlieff


----------



## barney

Another important factor to consider is the free metal component where presently, zinc smelters only pay for 85% of the zinc contained within the concentrate delivered by miners due to contract negotiations which take into account production losses etc. However miners are well aware that smelters are able to retrieve up to 97% of the zinc, hence they are essentially receiving free zinc. 
I am forecasting that this payables portion will also increase substantially to around 93% given enhanced metallurgical extraction technology. 

Given my forecasts and the research I am expecting that 2007 will be quite a bad year for zinc smelters compared to 2006 given these factors, even though the zinc price is expected to continue to rise in the short-term and then soften as supply increases.

Howdy JS, Interesting observations ............ Could this be the reason that Zinnifex decided to "off load" its smelter operations into a separate JV arrangement?? .... That would make good business sense I guess ... Cheers, Barney


----------



## michael_selway

http://www.globeinvestor.com/servlet/story/GAM.20061230.RYEARCOMM/GIStory/



> Agriculture could be set to make hay
> JOHN PARTRIDGE
> 
> 
> Saturday, December 30, 2006
> 
> You'd have to twist commodities high priest Jim Rogers' arm pretty hard to persuade him to bet heavily on precious metals in 2007, even though he doesn't particularly dislike their prospects.
> 
> "If I had to buy a metal, I'd buy silver, palladium, gold, I guess in that order," the creator of the Rogers international commodities index -- and its constituent energy, metals and agricultural indexes -- said recently when reached in New York. "But I don't have to buy any of them, so I'm not."
> 
> Instead, Mr. Rogers, who first gained fame as a partner of investing legend George Soros, is continuing to thump the tub for agriculture, which has accounted for about 35 per cent of the index since he launched it in 1998. "I expect that to be the place to be," he said.
> 
> He is not alone.
> 
> Commodities analyst John Normand at J.P. Morgan Securities Ltd., recently pegged agriculture as his top sectoral bet for 2007, followed by the precious metals Mr. Rogers plans to eschew. Energy and base metals will, by contrast, be the lowest-performing sectors, Mr. Normand said in a report.
> 
> "Low inventory levels and ongoing focus on [crop-derived] alternative fuels favour higher prices in 2007, even after this year's gains," he said of agriculture, noting that the sector has been "the laggard" through the current commodity price cycle. "Corn has the most upside . . . followed by wheat and soybeans."
> 
> After rocketing skywards for pretty much four years straight, commodity prices took a hit in the general global market correction that began in mid May of this year.
> 
> The Rogers index, for instance, climbed from a November, 2001, low of 1,245 points to a peak of 3,831 last May 11, then dropped as far as 3,198 at the beginning of October. It is currently in the 3,400 to 3,500 range.
> 
> Bank of Nova Scotia's commodity price index has traced a similar pattern, and currently sits 4.3 per cent higher than a year ago.
> 
> "In November, the index rallied quite sharply after a couple of months of weakness, and it's only 1 per cent below the . . . all-time peak," said Patricia Mohr, a vice-president who heads commodity research at the bank.
> 
> She also figures that, barring any major shocks, "we might retest the high at some point early next year."
> 
> But not led by the same commodities. Metals and minerals have supplanted oil and gas as the index's leaders, with gains of more than 50-per-cent as of last month.
> 
> By contrast, natural gas has gone from hero to zero.
> 
> In 2005, it led all commodities futures, with a 111-per-cent price gain -- as measured on the Goldman Sachs Commodity Index -- with much of the surge coming in the wake of the destruction of hurricane Katrina. But this year, in the absence of a ruinous storm season, its futures have been the worst performers, dropping 73 per cent.
> 
> Meanwhile, crude oil, which climbed from the low $40s (U.S.) a barrel to nearly $70 in 2005, cracked $77 in July of this year. But it then fell to less than $56 last month and is currently fetching a little over $63.
> 
> Strategists at Merrill Lynch & Co. recently lowered their 2007 price forecast for West Texas Intermediate to $60 a barrel from $65, citing decelerating global demand, high inventories and the rapid expansion of biofuel production.
> 
> They have, however, raised their 2008 forecast to $62 a barrel from $50, saying they expect global demand to strengthen and non-OPEC production growth to slow.
> 
> Bank of Montreal commodities specialist Bart Melek figures that OPEC members are likely to exhibit more discipline than they have in the past in an effort to keep prices up. "I think we have a new paradigm within OPEC: they want to keep prices at $60," he said. "They've gotten used to the revenues, and they've found out it doesn't kill their economy."
> 
> Ms. Mohr is betting that uranium will outperform all other commodities in 2007. The nuclear fuel, which just six years ago was fetching only $7.10 a pound, recently hit a startling $72, up nearly 10 per cent in a single week, as hedge funds and other financial players continue to make their presence felt.
> 
> Ms. Mohr now figures the fissile metal will average about $80 a pound in 2007 and finish the year close to $90. The rest of her top picks for next year are, in descending order, zinc, silver, canola, barley and gold.
> 
> Toronto-Dominion Bank economist Derek Burleton is less sanguine about the price outlook for commodities, at least in the first half of 2007.
> 
> He is forecasting that the TD commodity index will lose between 5 per cent and 7 per cent in the first six months of the year.
> 
> Mr. Burleton is expecting a drop of 25-per-cent to 30-per-cent in the prices of most base metals in the first half, after watching many of them follow "virtually a straight line up" in 2006.
> 
> "I definitely am of the view that the fundamentals for most base metals markets remain very strong, but I just believe that the current level of prices won't be sustained in 2007 and that we will get a pull-back," he said.
> 
> *Zinc will be in the best position to weather the storm, he added, while nickel and copper likely will experience "sharper declines."*
> 
> However, Mr. Burleton expects base metals prices to recover enough in the second half to leave the TD commodity index a little higher than it is right now. In TD's view, the U.S. economy is unlikely to suffer more than a temporary slowdown, and it also sees continued robust demand coming especially from China and India.
> 
> Mr. Burleton also figures there may be some good news in store for Canada's beleaguered forest products industry.
> 
> It has been hammered hard by the popping of the U.S. housing bubble, with lumber falling to as low as $229 per thousand board feet in late October, which he described as "depression levels."
> 
> However, history shows that lumber prices generally do not stay below $300 per thousand board feet -- roughly break-even for the industry at large -- for very long, he said.
> 
> "We've got [the price] heading back above $300 by the second quarter and staying there for the rest of the year," he said.
> 
> Best and worst performing futures in 2006
> 
> Ranked returns, year-to-date
> 
> Nickel +200.1%
> Zinc +152.3
> Lead +60.8
> Corn +54.2
> Copper +52.3
> Silver +42.7
> Wheat +24.8
> Kansas wheat +20.0
> Gold +19.9
> Aluminum +18.7
> Cocoa -5.9
> Gas oil -10.8
> Brent crude -12.0
> Feed cattle -12.7
> Cotton -15.1
> Crude oil -23.5
> Gasoline -23.8
> Sugar -34.5
> Heating oil -36.5
> Natural Gas -79.0
> 
> SOURCE: BLOOMBERG FINANCIAL SERVICES
> 
> © The Globe and Mail


----------



## wavepicker

chops_a_must said:
			
		

> Where to from here? ZFX bounced from below 18 again.




You were saying chops.............. A few minor subdivisions were finished to the upside before the this baby made it's move, but overall was only out by 2 days. It's funny- I find that when people get the knives out and start attacking me, that's when I feel I have made the right decision.

As expected, zinc along with the other metals is in the process of getting hammered. 

MS:-  Never doubt a good chart pattern. Much can be gleaned from charts
Rederob:- Fundementals LAG the market. 

Trade what you see not what you hope or expect to happen.
To those that went short, they did their hard work and planning. Now they can sit back and let the market do the work for them.

Zinc going back to 3000-3500 a tonne within 12 months. To those that decide to hang and hope, they will be waiting for a while IMO

Cheers


----------



## rederob

wavepicker said:
			
		

> Rederob:- Fundementals LAG the market.



Time sorts out many things.
In the medium term (I use around a 6 month time frame when stating that sense) the case for zinc will be significantly stronger than it is today and was last year.
Fundamentals actually drive the market, and technicals provide the history.
If that were not so, technicians would have foreseen CDU having a stellar 2006.
As has happened many times before for base metals, the bears see a retrace gather momentum and think the jig is up for metals.
Whereas during the week the only metal that "drifted" fundamentally was copper, and that will rebound slightly next week.
All that has happened in recent days is a huge amount of money being taken off the table by funds who are convinced their money will be better placed elsewhere.
And their actions have collapsed base and metal prices substantially.
Technically, zinc is going through the same period of consolidation it went through from May 2006.
Fundamentally, zinc prices stalled when substantial destocking of Chinese inventories occurred as the metal went from contango to strong backwardation. Unless China can show in the next month or so that it has significant metal oversupply to deliver to LME (Singapore warehouse) the trend from 2006 will be repeated this year.
At global levels the supply/demand fundamentals for zinc will only materially change to the downside in 2007 if there is an early failure of western economies.


----------



## wavepicker

rederob said:
			
		

> Time sorts out many things.
> As has happened many times before for base metals, the bears see a retrace gather momentum and think the jig is up for metals.




Hi rederob, IMO zinc will go through a retracement OK. It's largest retracement since 2003. This may take upward to 1 yr IMO. After that I will put the bull horns on with you.



			
				rederob said:
			
		

> Technically, zinc is going through the same period of consolidation it went through from May 2006.




Possibly, but I think this time it will take much longer, if you have the nerve to hold. Most people don't, and that's why this will be a major correction I think. Before the bullmarket can resume, most market players must be utterly convinced that there is no future of prices recovering. Basically this correction has to wash out all the bulls first!!

Cheers


----------



## champ2003

Fat profits has an overwhelmingly bullish view on Zinc for 2007 and believe's that the price of Zinc will hit new heights in 2007.


----------



## wavepicker

champ2003 said:
			
		

> Fat profits has an overwhelmingly bullish view on Zinc for 2007 and believe's that the price of Zinc will hit new heights in 2007.




Hey, anything is possible in the market. Personally I am a short term player and trade move by move, both up and down where an identifiable pattern has a high probability. sometimes it don't work. Every moment and move in the market however is unique.

If Fat Prophets is bullish, then good luck to them. I suppose they have done rather well over the last 3 years like many other buy and holders. However past performance is no indication of future perfomance.

I think you have to do your own research though.
Good Luck

Cheers


----------



## michael_selway

wavepicker said:
			
		

> Trade what you see not what you hope or expect to happen.
> To those that went short, they did their hard work and planning. Now they can sit back and let the market do the work for them.




*Wavepicker, both Traders and Fundies buy and sell on what they think will happen next with the share price, its all future stuff right?*



			
				rederob said:
			
		

> Fundamentals actually drive the market, and technicals provide the history.




*Red I agree, you have to look at the future demand/supply of the zinc market and yes it will be tight, meaning a bullish zinc price generally.

Wavepicker, you mention the below, but thats a contradiction of what you do. You look at charts to base you next decision. Charts are past performance right?*



			
				wavepicker said:
			
		

> However past performance is no indication of future perfomance.




thx

MS


----------



## toothfairy

champ2003 said:
			
		

> Fat profits has an overwhelmingly bullish view on Zinc for 2007 and believe's that the price of Zinc will hit new heights in 2007.




Fat Prophets has also been telling people to buy WES for a couple of years now, use your own judgement. I think they got fat by making profits from others.

Cheers.


----------



## chops_a_must

wavepicker said:
			
		

> You were saying chops.............. A few minor subdivisions were finished to the upside before the this baby made it's move, but overall was only out by 2 days. It's funny- I find that when people get the knives out and start attacking me, that's when I feel I have made the right decision.
> 
> As expected, zinc along with the other metals is in the process of getting hammered.



I don't remember attacking you. I was just healthily sceptical, like I am of everything. If you want to know what decision I made, you can have a look at the ZFX thread. I made it based on the change of sentiment. I'm not about to let pride lead to stupidity.


----------



## BREND

michael_selway said:
			
		

> *Wavepicker, both Traders and Fundies buy and sell on what they think will happen next with the share price, its all future stuff right?*
> 
> 
> 
> *Red I agree, you have to look at the future demand/supply of the zinc market and yes it will be tight, meaning a bullish zinc price generally.
> 
> Wavepicker, you mention the below, but thats a contradiction of what you do. You look at charts to base you next decision. Charts are past performance right?*
> 
> 
> 
> thx
> 
> MS




Zinc demand in China has been weak actually, and many tons of zinc has been delivered into London Metal Exchange warehouses for the past few months (since July 06). Because pricing of zinc in China is lower compared to LME.

On the surface, Zinc looks like a good metal to buy, due to its falling inventory level. But inventory level has been rising for the past weeks. Is this a sign that zinc price has peaked?


----------



## wavepicker

michael_selway said:
			
		

> *
> 
> Wavepicker, you mention the below, but thats a contradiction of what you do. You look at charts to base you next decision. Charts are past performance right?*





Hi MS, was referring to the past performance of Fat Prophets, not the market.

cheers


----------



## Magdoran

So I take it that all the "perma" bulls are buying Zinc stocks like mad right now, correct?


Mag


----------



## BREND

Magdoran said:
			
		

> So I take it that all the "perma" bulls are buying Zinc stocks like mad right now, correct?
> 
> 
> Mag




I believe zinc is still a good investment if you are looking at more than 1 year investment period. Zinc demand may be slowing, but zinc inventory had also fallen so much for the past 1-2 years. So zinc market could still be tight in future. 

I notice that most zinc companies also supply lead, ie Teck Cominco and Zinifex. Lead is few of the metal whose demand is growing in China now. So those companies will benefit as well.

I'm targeting Zinifex myself, still waiting for the price to drop more.


----------



## chops_a_must

wavepicker said:
			
		

> I think there is a fair chance we will see 3000 in Zinc before 5000
> Cheers



And quicker than you think by the looks! Lol!


----------



## BREND

chops_a_must said:
			
		

> And quicker than you think by the looks! Lol!




Zinc price is now 3730/ 3750.


----------



## wavepicker

chops_a_must said:
			
		

> And quicker than you think by the looks! Lol!




Always the way isn't it chops. Sorry, sounded conservative as didn't want to scare the bulls too much. But their was a great short term trade in the offering if anyone wanted to make it

Cheers


----------



## YOUNG_TRADER

Zinc getting smashed!!!!!!!   

Other Base metals aren't doing too bad, Copper is actually up!  

*Zinc January 08,08:00 * 
Bid/Ask 1.7297 - 1.7388 
Change -0.0964 * -5.28%  *


----------



## chops_a_must

ZINC-INDICATION Quanto (E..     3,810.01   -80.00 (-2.06 %)   

 Sedol: -   Exch: Misc.   Sym: Q_EUR_GS0000000097_U01   08/01    13:59


----------



## BREND

According to China's Nonferrous Metal Trade report from July to Nov, here are the % increase in export of zinc on a yoy basis:

July +17% 
Aug +169%
Sept +148%
Oct 616%
Nov 741%

Notice the huge increase in export of zinc from China.
If China is exporting huge amount of zinc, why do people still think demand for zinc is still high?


----------



## rwkni1

BREND said:
			
		

> According to China's Nonferrous Metal Trade report from July to Nov, here are the % increase in export of zinc on a yoy basis:
> 
> July +17%
> Aug +169%
> Sept +148%
> Oct 616%
> Nov 741%
> 
> Notice the huge increase in export of zinc from China.
> If China is exporting huge amount of zinc, why do people still think demand for zinc is still high?




Wow, that's pretty interesting, but is that net exports or gross exports? Do you have a link to the source?


----------



## BREND

rwkni1 said:
			
		

> Wow, that's pretty interesting, but is that net exports or gross exports? Do you have a link to the source?




Gross export. I found the information from Bloomberg, so no link to the source.


----------



## rwkni1

Cheers. Clearly some ramp up in production here, but i'm pretty sure China is still a net importer of zinc. I don't think Chinese consumption of zinc will just drop off a wall, especially given their production of galvanized steel is still increasing. I'd be pretty confident Chinese buyers will return to the market quite soon, and LME inventories in the Singapore warehouse will resume their downward trend. The situation in zinc right now almost smells similar to copper, we know the Chinese demand should be there but it seems to have gone on holiday - maybe they are drawing down from internal stockpiles? Either way, there is now no significant new mine production due out in 2007, with delays to San Christobel and Herald Resources' project in Indonesia. The market has to remain tight. Also, i noticed this morning on Bloomberg something about the Bolivian government looking to increase mining taxes six fold. I don't know exactly what impact that will have on San Christobel, but i can't imagine it will help speed up progress.


----------



## BREND

rwkni1 said:
			
		

> Cheers. Clearly some ramp up in production here, but i'm pretty sure China is still a net importer of zinc. I don't think Chinese consumption of zinc will just drop off a wall, especially given their production of galvanized steel is still increasing. I'd be pretty confident Chinese buyers will return to the market quite soon, and LME inventories in the Singapore warehouse will resume their downward trend. The situation in zinc right now almost smells similar to copper, we know the Chinese demand should be there but it seems to have gone on holiday - maybe they are drawing down from internal stockpiles? Either way, there is now no significant new mine production due out in 2007, with delays to San Christobel and Herald Resources' project in Indonesia. The market has to remain tight. Also, i noticed this morning on Bloomberg something about the Bolivian government looking to increase mining taxes six fold. I don't know exactly what impact that will have on San Christobel, but i can't imagine it will help speed up progress.




I hope you are right, because I want to buy Zinifex or Teck Cominco.
Yesterday JP Morgan and BNP Paribas said they are bullish on zinc.


----------



## BREND

Today 2475 mt of Zinc is delivered into Spore warehouse. Likely the source comes from China. If China does not need Zinc, why should we be bullish on this metal??


----------



## chops_a_must

BREND said:
			
		

> Today 2475 mt of Zinc is delivered into Spore warehouse. Likely the source comes from China. If China does not need Zinc, why should we be bullish on this metal??



It's only a temporary thing I think:

http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=31275&sid=10754417&con_type=1


----------



## BREND

chops_a_must said:
			
		

> It's only a temporary thing I think:
> 
> http://www.thestandard.com.hk/news_detail.asp?pp_cat=22&art_id=31275&sid=10754417&con_type=1




It has been a few months. But I got no doubt it will only be temporary, because it will end the day LME price is about the same as the pricing of zinc inside China.


----------



## BREND

Zinc is down $282 today, till now. Price is $3410. Still bullish?


----------



## pacer

Yup....been there and done this made a few $$$K on zinc....time to find another hyper play....are tech or pharmas back in the swing of things?....don't tell me the flamin' _*dot coms are back in favour*_    gawd...dussunt history repeat itself.....be prepared fot the fallout......and good luck to the gamblers....hehe.....


----------



## Fab

pacer said:
			
		

> Yup....been there and done this made a few $$$K on zinc....time to find another hyper play,,,are tech or pharmas back in the swing of things?....don't tell me the flamin' _*dot coms are back in favour*_    gawd...dussunt history repeat itself.....be prpared fot the fallout......and good luck to the gamblers....hehe,,,,,,



I am thinking biotech will be the other commodity superstar. I am personally backing RBY.


----------



## toothfairy

Another confusing as hell day of Zn prices from different sources:

Kitco metal : +5% from about $1.66 to $1.74 / lb.

Basemetals news column : say Zn jumps 6.4% or $225 to $3740, yet the headling says $3670.5 which is $28.5 down from yesterday.

Zinifex site and Metalprices sites both said down $28.5 to $3670.5.

ZFX went up at open as if POZ was up.

Does anyone know what's going on?


----------



## mahmoodf

I agree toothfairy, very confusing!

The latest price (as far as I can tell is):

Cash  $3,819/MT
3MTH $3,780/MT

This is obtained by looking at the top right corner of the metalprices web page for zinc. You will see it says *most recent LME zinc*.


----------



## rwkni1

From Bloomberg - zinc gained 11c/lb to $1.73/lb. Multiply by 2204.6 to get $/t. Bargain hunters jumping on board, although inventories did rise 200t to 94kt.


----------



## BREND

rwkni1 said:
			
		

> From Bloomberg - zinc gained 11c/lb to $1.73/lb. Multiply by 2204.6 to get $/t. Bargain hunters jumping on board, although inventories did rise 200t to 94kt.




Yes zinc price has recovered yesterday, but I would not want to put my money in zinc now. I will wait unless the inventory had stopped to increase. Recent rise in inventory is due to delivery from China merchants. If China does not need zinc, why should we be optimistics about this metal?

http://basemetal-trading.blogspot.com/


----------



## rwkni1

China certainly does need zinc given the massive quantities of galvanized steel it is producing, and Chinese zinc consumption is expected to grow by 4.6% in 2007 according to the international zinc and lead study group. What you're seeing here is most likely a seasonal drop off in demand, combined with some price elasticity. Now that prices have come off expect to start seeing cancellations at LME warehouses again. Zinifex have noted at their last couple of results that zinc demand, particularly for diecast alloys, is particularly price sensitive. i.e. orders pick up strongly in weeks when there has been a pull back in prices. Having said this, i certainly wouldn't rule out some pretty considerable price volatility over the next few weeks...


----------



## BREND

rwkni1 said:
			
		

> China certainly does need zinc given the massive quantities of galvanized steel it is producing, and Chinese zinc consumption is expected to grow by 4.6% in 2007 according to the international zinc and lead study group. What you're seeing here is most likely a seasonal drop off in demand, combined with some price elasticity. Now that prices have come off expect to start seeing cancellations at LME warehouses again. Zinifex have noted at their last couple of results that zinc demand, particularly for diecast alloys, is particularly price sensitive. i.e. orders pick up strongly in weeks when there has been a pull back in prices. Having said this, i certainly wouldn't rule out some pretty considerable price volatility over the next few weeks...




Many people had commented that delivery from China is just temporary, just a seasonal effect. Do you know that China has started to deliver huge amount of zinc since July 06? I will not rule out that the delivery will stop some day, I will wait for that day first. So far inventory is still rising almost on a daily basis.


----------



## Halba

China just dumping to get the price down whilst on the other side they buy at cheaper prices.

Its all dodgy manipulation.


----------



## toothfairy

Hate to sound sceptical, but lately there are a lot of "China Zinc Experts" here saying all sorts of DESTOCKING, DUMPING & MANIPULATING of zinc stock into Singapore etc.
How would you guys know what exactly China is doing? Do they post their movements somewhere that everyone can check? Or does the Big Brother has spied it out and post it somewhere? Is it reliable info or like some media who always want to tell you the reverse? Does most of the zinc stock in LME now has "Make in China" stamped on it? Or how do you know that they are not from Zinifex?
Or is it merely your personal opinion / guess? May be someone can quote or refer us to some source so we can make some judgement.
Thanks.


----------



## BREND

toothfairy said:
			
		

> Hate to sound sceptical, but lately there are a lot of "China Zinc Experts" here saying all sorts of DESTOCKING, DUMPING & MANIPULATING of zinc stock into Singapore etc.
> How would you guys know what exactly China is doing? Do they post their movements somewhere that everyone can check? Or does the Big Brother has spied it out and post it somewhere? Is it reliable info or like some media who always want to tell you the reverse? Does most of the zinc stock in LME now has "Make in China" stamped on it? Or how do you know that they are not from Zinifex?
> Or is it merely your personal opinion / guess? May be someone can quote or refer us to some source so we can make some judgement.
> Thanks.




Yes, I have heard of this from my China clients.


----------



## rederob

toothfairy
Unless we are watching every truck deliver to every ship that arrives at ports that hold LME inventory, we are all guessing.
But I prefer to think that LME street talk is usually on the ball when it comes to determining where large deliveries are coming from; particularly when the geography and delivery timeframes are so apparent.
And do we discount the possibility that China is trying to get its metal cheaper by "working" the system to its advantage?


----------



## BREND

Whether it is China merchant or other nations' who are delivering zinc inventory, I still see no reason to be bullish in this metal when inventory contnues to rise since the start of Dec 06.


----------



## michael_selway

BREND said:
			
		

> Whether it is China merchant or other nations' who are delivering zinc inventory, I still see no reason to be bullish in this metal when inventory contnues to rise since the start of Dec 06.




you cant really base a decision one month worth of rises, and its insignificant amounts

thx

MS


----------



## toothfairy

rederob said:
			
		

> And do we discount the possibility that China is trying to get its metal cheaper by "working" the system to its advantage?




Rederob
I know of instos "working" the system by dumping shares to push price down in the hope of buying back @ a lower price. That's OK for shares because if they fail & can't buy the same share back @ a lower price than there are many more others to choose from. As you have mentioned before, a commodity is a necessity (we assume that's the case for China) and they must buy it back without the flexibility of alternatives. That's quite risky and not that effective, as you sell, price goes down; when you buy back, price goes back up. Plus the hassle of transportation and uncertainties.


----------



## chops_a_must

michael_selway said:
			
		

> you cant really base a decision one month worth of rises, and its insignificant amounts
> 
> thx
> 
> MS



And now more zinc capacity will be added in february:

http://www.optusnet.com.au/news/story/abc/20070116/13/business/1827720.inp


----------



## rwkni1

chops_a_must said:
			
		

> And now more zinc capacity will be added in february:
> 
> http://www.optusnet.com.au/news/story/abc/20070116/13/business/1827720.inp




Do you have any idea what the tonnage will be? I understand there will be no significant new zinc capacity (i.e. greater than 40ktpa) coming on line this year. Yes stocks have been rising, but the fundamentals suggest this cannot be sustained. The international zinc and lead study group forecasts zinc demand to increase 4.5%, or about 500kt. The only two major mines that were scheduled to come on line in 2007 were San Christobal (180ktpa) and Herald's mine in Indonesia (120ktpa). Herald's operation is unlikely to get up this year because of delays in getting government approval, and San Christobal has been delayed until well into the second half of this year. Also, according to a BNP note i saw today, the ILZSG have significantly increased their Chinese zinc demand forecasts for 2007. In my opinion, the only thing that could stop zinc is a huge uplift in internal production from China that the market is unaware of. If the next two months of data show China as a net exporter of zinc i may start to become bearish, but in the meantime, i'm not too concerned. Also, its worth noting zinc stocks are trading on such low P/E's anyway (ZFX around 4-5x), there should be limited downside in stocks.


----------



## rwkni1

Oh, and brend, this may be an explanation for the current increase in Chinese exports apparent in October's data...

http://smartkids.thestandard.com.hk/news_print.asp?art_id=31275&sid=10754417


----------



## rwkni1

.... and another...

http://greatinvestments.blogspot.com/2006/12/why-lme-zinc-inventory-depletion-has.html


----------



## chops_a_must

rwkni1 said:
			
		

> .... and another...
> 
> http://greatinvestments.blogspot.com/2006/12/why-lme-zinc-inventory-depletion-has.html



So you have read these articles and see absolutely no reason to become short term bearish on Zinc?

 

Strange...


----------



## coyotte

The 12 month Chart (spot) on Kitco is showing a classic Head & Shoulders Pattern at the moment.


Cheers


----------



## rwkni1

chops_a_must said:
			
		

> So you have read these articles and see absolutely no reason to become short term bearish on Zinc?
> 
> 
> 
> Strange...




The only reason for being bearish on zinc that has been voiced on this thread is that stockpiles are no longer declining at the rate at which they were for most of 2006. These articles offer an explanation as to why LME stock declines have flattened out in December, and the explanation is based on one-off factors. Nope, see no reason to bearish from reading these articles.


----------



## chops_a_must

rwkni1 said:
			
		

> The only reason for being bearish on zinc that has been voiced on this thread is that stockpiles are no longer declining at the rate at which they were for most of 2006. These articles offer an explanation as to why LME stock declines have flattened out in December, and the explanation is based on one-off factors. Nope, see no reason to bearish from reading these articles.



I can see one huge, glaring reason, that is very obvious to a novice such as myself. And that is, if inventories keep rising, even temporarily, it is possible to see the zinc spot falling to support around $3,000. Do you seriously think that if inventories keep rising, even temporarily, that it will have absolutely no impact on the spot price?


----------



## rwkni1

chops_a_must said:
			
		

> I can see one huge, glaring reason, that is very obvious to a novice such as myself. And that is, if inventories keep rising, even temporarily, it is possible to see the zinc spot falling to support around $3,000. Do you seriously think that if inventories keep rising, even temporarily, that it will have absolutely no impact on the spot price?




Chops – you’re missing the link between Chinese exports and the rising stocks. Almost all of the increase in zinc inventories you’re seeing on LME are the result of deliveries into the Singapore warehouse. Where have they come from? China. If inventories are rising because of a rebate that Chinese producers receive for exporting zinc, and not because demand/supply fundamentals have shifted, then rising stockpiles will not continue as eventually the metal from Singapore will have to be drawn upon to meet Chinese demand, which remains as robust as ever from all indications.


----------



## chops_a_must

rwkni1 said:
			
		

> Chops – you’re missing the link between Chinese exports and the rising stocks. Almost all of the increase in zinc inventories you’re seeing on LME are the result of deliveries into the Singapore warehouse. Where have they come from? China. If inventories are rising because of a rebate that Chinese producers receive for exporting zinc, and not because demand/supply fundamentals have shifted, then rising stockpiles will not continue as eventually the metal from Singapore will have to be drawn upon to meet Chinese demand, which remains as robust as ever from all indications.



That _should_ have ended last year. But as we are seeing, for whatever reason, they have not.


----------



## chops_a_must

And to quote your source:

"Supply of zinc in the mainland has risen since Zhuye Torch and Baiyin Nonferrous Metals resumed production at their respective 200,000 and 100,000-tonne-per-year zinc plants last week. The plants were closed for repairs last month."

Funny how this coincided with the price spike.

And if we are going to be getting extra shipments of zinc from Alaska during Q1 (and we aren't even 3 weeks into Q1), then why wont there be a glut of zinc in the near term?


----------



## rwkni1

The rebate for lower grade products ended, but the rebate still exists for special high grade zinc, which is the only zinc product that can be placed on warrant on the LME. With the flood of lower grade material onto the market, users may have stocked up at a cheaper price, dampening demand for the more expensive high-grade LME stuff until all the low grade material is used. In the mean time, significant amounts of SHG zinc are still being exported from China because the rebate makes it attractive to do so. Of course this is just a theory, but i think it best explains why zinc stocks went from declining in an almost linear fashion for the most part of last year, to suddenly being on hold. There is no new supply and the least bullish analysts are forecasting demand growth in the realm of 3-3.5% in 2007, so supply/demand fundamentals don't seem to explain what we've seen in December.


----------



## rwkni1

chops_a_must said:
			
		

> And to quote your source:
> 
> "Supply of zinc in the mainland has risen since Zhuye Torch and Baiyin Nonferrous Metals resumed production at their respective 200,000 and 100,000-tonne-per-year zinc plants last week. The plants were closed for repairs last month."
> 
> Funny how this coincided with the price spike.
> 
> And if we are going to be getting extra shipments of zinc from Alaska during Q1 (and we aren't even 3 weeks into Q1), then why wont there be a glut of zinc in the near term?




The increase in supply you're talking about there is refined material, it does not represent any new zinc coming out of the ground. The concentrate market remains very tight and these smelters would be kick starting their operations again using stockpiled concentrates. 

Not sure what you mean when you say funny how this coincided with the price spike. 

The extra 25kt from Red Dog in 1Q07 is a fairly immaterial amount when you consider demand is increasing by 100kt per quarter.


----------



## chops_a_must

rwkni1 said:
			
		

> With the flood of lower grade material onto the market, users may have stocked up at a cheaper price, dampening demand for the more expensive high-grade LME stuff until all the low grade material is used. In the mean time, significant amounts of SHG zinc are still being exported from China because the rebate makes it attractive to do so.
> 
> The extra 25kt from Red Dog in 1Q07 is a fairly immaterial amount when you consider demand is increasing by 100kt per quarter.




"*The world's biggest zinc mine*, Teck Cominco's Red Dog in Alaska, had some delays in shipments in Q3, increasing their Q4 shipments significantly. Red Dog only can ship a few months out of the year because of their Alaskan climate, so the Q4 spike in zinc supply is much bigger than normal this year. Because of weather conditions, about 50,000 tonnes of zinc in concentrate that was expected to be shipped in Q3 2006 was delayed to Q4 2006 and Q1 2007, with 25,000 additional tonnes of sales in each quarter."

That is ON TOP of expected shipments.

I still see no reason why not to be _short term_ bearish on zinc.


----------



## rwkni1

chops_a_must said:
			
		

> "*The world's biggest zinc mine*, Teck Cominco's Red Dog in Alaska, had some delays in shipments in Q3, increasing their Q4 shipments significantly. Red Dog only can ship a few months out of the year because of their Alaskan climate, so the Q4 spike in zinc supply is much bigger than normal this year. Because of weather conditions, about 50,000 tonnes of zinc in concentrate that was expected to be shipped in Q3 2006 was delayed to Q4 2006 and Q1 2007, with 25,000 additional tonnes of sales in each quarter."
> 
> That is ON TOP of expected shipments.
> 
> I still see no reason why not to be _short term_ bearish on zinc.




I understand the extra 25kt is ON TOP of expected shipments. The extra 100kt of forecast demand is ON TOP of demand for the last quarter of 2006. Predicting short-term metal price movements is a tough game, who knows when those Asian customers will have used up all the low grade material dumped by the Chinese and draw-downs will resume at Singapore? It could be tomorrow or in 6 weeks. But, while indicators still point to demand exceeding supply for the forseeable future I won't be selling any zinc stocks.


----------



## michael_selway

chops_a_must said:
			
		

> I can see one huge, glaring reason, that is very obvious to a novice such as myself. And that is, if inventories keep rising, even temporarily, it is possible to see the zinc spot falling to support around $3,000. Do you seriously think that if inventories keep rising, even temporarily, that it will have absolutely no impact on the spot price?




For any current market price, theres always a large "future expectation" built into it.

So short term LME stocks can rise, but it may drop alot because peopel may think things will change, and whats happenning is only "once-off"

thx

MS


----------



## rederob

michael_selway said:
			
		

> So short term LME stocks can rise, but it may drop alot because peopel may think things will change, and whats happening is only "once-off"



MS
This could be a lot of "once-offs".
But not for months on end as it is very unlikely that supply will meet demand over the next six months.
If you trade, stay away from zincs as there is a potential for a lot more sideway action, as other posters note.
If you invest, the likelihood of zinc prices rebounding is pretty good.
Is it guaranteed, tho?


----------



## michael_selway

rederob said:
			
		

> MS
> This could be a lot of "once-offs".
> But not for months on end as it is very unlikely that supply will meet demand over the next six months.
> If you trade, stay away from zincs as there is a potential for a lot more sideway action, as other posters note.
> If you invest, the likelihood of zinc prices rebounding is pretty good.
> Is it guaranteed, tho?




Nothings guaranteed lol!

But turn around for lead and Nickel was very sweet yes 

thx

MS


----------



## Magdoran

rwkni1 said:
			
		

> The only reason for being bearish on zinc that has been voiced on this thread is that stockpiles are no longer declining at the rate at which they were for most of 2006. These articles offer an explanation as to why LME stock declines have flattened out in December, and the explanation is based on one-off factors. Nope, see no reason to bearish from reading these articles.



Yes, but do you understand how markets trend?  You could extend the same kind of theoretical fundamental argument to crude oil, and rail against the recent price action saying it is contrary to your estimations.

Please do rail all you like.  I just love guys like you who try to catch that falling knife buying a falling instrument while the savvy players are selling short.  You can argue the finer points till you’re blue in the face.

Brian Price did the same thing for a long time staying short losing $25 odd million dollars during the height of the “dot com” boom, as it turns out later correctly evaluating that the valuations in the market in dot com stocks was way out of wack with the reality… But the timing was wrong.  

Markets can reach ridiculous prices either fuelled by unbridled greed, or driven by frenzied fear and panic.  Just look at the price of oil for a roller coaster ride, or the NASDAQ from 1998-2000.  Try studying those charts for a lesson in market behaviour.

In simple terms price falls when there are more sellers than buyers…  You don’t have to divine what every person involved was doing, the price action is quite obvious to many technical analysts.  

Don’t get me wrong, I have a very healthy respect for good fundamental analysts, but when markets move, they can often overshoot the mark since they are emotionally driven.  You may consider remembering this and wisely take market sentiment and market behaviour into account rather than rigidly applying a theory.

Regards


Magdoran


----------



## Freeballinginawetsuit

Magdoran said:
			
		

> Yes, but do you understand how markets trend?  You could extend the same kind of theoretical fundamental argument to crude oil, and rail against the recent price action saying it is contrary to your estimations.
> 
> Please do rail all you like.  I just love guys like you who try to catch that falling knife buying a falling instrument while the savvy players are selling short.  You can argue the finer points till you’re blue in the face.
> 
> Brian Price did the same thing for a long time staying short losing $25 odd million dollars during the height of the “dot com” boom, as it turns out later correctly evaluating that the valuations in the market in dot com stocks was way out of wack with the reality… But the timing was wrong.
> 
> Markets can reach ridiculous prices either fuelled by unbridled greed, or driven by frenzied fear and panic.  Just look at the price of oil for a roller coaster ride, or the NASDAQ from 1998-2000.  Try studying those charts for a lesson in market behaviour.
> 
> In simple terms price falls when there are more sellers than buyers…  You don’t have to divine what every person involved was doing, the price action is quite obvious to many technical analysts.
> 
> Don’t get me wrong, I have a very healthy respect for good fundamental analysts, but when markets move, they can often overshoot the mark since they are emotionally driven.  You may consider remembering this and wisely take market sentiment and market behaviour into account rather than rigidly applying a theory.
> 
> Regards
> 
> 
> Magdoran





Like comparing chalk to cheese, NASDAQ/POO>Zinc.


----------



## millionplusmate

Well....i like your optimism but if copper does bottom out this year to $3000AU then why would ZINC do any better? Im no expert on Zinc but i am aware that copper prices generally lead other prices, obviously with the exception of precious metals. For me personally, the commodities sector for 2007 is full of risk, especially as there is such huge armament stockpiles already and the US economy is running out of steam...i will come back to this market in maybe 5 years after we start scraping out of the recession which seems quite imminent. keep an eye on debt levels in both US and Australia...someone is going to have to get a spanking and its not normally the big banks...is it???

Bradley


----------



## rederob

millionplusmate said:
			
		

> Well....i like your optimism but if copper does bottom out this year to $3000AU then why would ZINC do any better? Im no expert on Zinc but i am aware that copper prices generally lead other prices, obviously with the exception of precious metals. For me personally, the commodities sector for 2007 is full of risk, especially as there is such huge armament stockpiles already and the US economy is running out of steam...i will come back to this market in maybe 5 years after we start scraping out of the recession which seems quite imminent. keep an eye on debt levels in both US and Australia...someone is going to have to get a spanking and its not normally the big banks...is it???
> 
> Bradley



Copper prices have gone backwards while zinc and lead and tin have increased.
And Nickel yesterday hit yet another record high.
When common assumptions are disconnected, stay connected at your peril.


----------



## Magdoran

Freeballinginawetsuit said:
			
		

> Like comparing chalk to cheese, NASDAQ/POO>Zinc.



Not really.  Compare the charts and the price action.  The metaphor was about markets hitting highs on enthusiasm, and then falling hard on fear, moving to extremes despite the fundamentals.

My point which I thought was abundantly clear was to consider how markets trend, and that the recent price action in a range of markets and commodities has seen some strong moves.  Crude oil is a good example of this.

Commodities if you study the charts have a history of spiking up to blow off highs, and then are subject to marked corrections.

Given that the argument that spurred my comment was about inventories, oil I would have thought is a poignant example of how an exhaustive bullish drive up to around $80 fell down to around $50.

Can you see the parallel “Freeball” or do I have to draw you a picture?  Why not try looking at some charts yourself, you may learn something.


----------



## Rafa

well said...


----------



## BREND

Delivery of zinc from China merchants continues, I had advised my clients not to go long on zinc. So one of them shorted zinc, and makes money now. Hee!


----------



## Freeballinginawetsuit

Magdoran said:
			
		

> Not really.  Compare the charts and the price action.  The metaphor was about markets hitting highs on enthusiasm, and then falling hard on fear, moving to extremes despite the fundamentals.
> 
> My point which I thought was abundantly clear was to consider how markets trend, and that the recent price action in a range of markets and commodities has seen some strong moves.  Crude oil is a good example of this.
> 
> Commodities if you study the charts have a history of spiking up to blow off highs, and then are subject to marked corrections.
> 
> Given that the argument that spurred my comment was about inventories, oil I would have thought is a poignant example of how an exhaustive bullish drive up to around $80 fell down to around $50.
> Can you see the parallel “Freeball” or do I have to draw you a picture?  Why not try looking at some charts yourself, you may learn something.




Hi Mag,

I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.Nothing goes vertical forever and pullbacks are inevitable.
But for some who hold Zincers longterm for fundamentals, nothing has changed to the underlying dyanamics driving them ATM in my opinion. That is not to say Zinc has not recently fallen through a support level and could go sideways for a while before resuming an uptrend.
Nickles resumed its uptrend after a pause for a while, maybe Zinc just needs a break.
Both are required by the China/India story which you either believe in or dont, if you don't, then why trade them?, their all overpriced ATM.

Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.


----------



## chops_a_must

Freeballinginawetsuit said:
			
		

> Hi Mag,
> 
> I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.Nothing goes vertical forever and pullbacks are inevitable.
> But for some who hold Zincers longterm for fundamentals, nothing has changed to the underlying dyanamics driving them ATM in my opinion. That is not to say Zinc has not recently fallen through a support level and could go sideways for a while before resuming an uptrend.
> Nickles resumed its uptrend after a pause for a while, maybe Zinc just needs a break.
> Both are required by the China/India story which you either believe in or dont, if you don't, then why trade them?, their all overpriced ATM.
> 
> Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.



I don't think anyone is disputing the long term fundamentals of zinc. The original dispute was in regards to the short term outlook.


----------



## BREND

chops_a_must said:
			
		

> I don't think anyone is disputing the long term fundamentals of zinc. The original dispute was in regards to the short term outlook.




Nobody? Did you not include Goldman Sachs?

The largest zinc manufacturer in China, Torch, recently said they will be supplying 100,000 tons of zinc annually starting from next year. New supply of zinc into market, is this a short term outlook?

I'll not be convinced that the fundamental of zinc has improved, unless I can see that inventory continues to fall. Currently, not convinced yet.

Anyway my client has closed his short position on zinc, earn money happily.


----------



## rederob

BREND said:
			
		

> Nobody? Did you not include Goldman Sachs?
> 
> The largest zinc manufacturer in China, Torch, recently said they will be supplying 100,000 tons of zinc annually starting from next year. New supply of zinc into market, is this a short term outlook?
> 
> I'll not be convinced that the fundamental of zinc has improved, unless I can see that inventory continues to fall. Currently, not convinced yet.
> 
> Anyway my client has closed his short position on zinc, earn money happily.



BREND
Torch is not a miner/producer of zinc, but a refiner.  The company needs to ramp up refined metal output to meet demand, which this article notes is not going to be easy:
http://resources.alibaba.com/article/29608/Chinese_zinc_maker_targets_output_increase.htm


----------



## BREND

rederob said:
			
		

> BREND
> Torch is not a miner/producer of zinc, but a refiner.  The company needs to ramp up refined metal output to meet demand, which this article notes is not going to be easy:
> http://resources.alibaba.com/article/29608/Chinese_zinc_maker_targets_output_increase.htm




Thanks, so you remain bullish on zinc?


----------



## Magdoran

Freeballinginawetsuit said:
			
		

> Hi Mag,
> 
> I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.Nothing goes vertical forever and pullbacks are inevitable.
> But for some who hold Zincers longterm for fundamentals, nothing has changed to the underlying dyanamics driving them ATM in my opinion. That is not to say Zinc has not recently fallen through a support level and could go sideways for a while before resuming an uptrend.
> Nickles resumed its uptrend after a pause for a while, maybe Zinc just needs a break.
> Both are required by the China/India story which you either believe in or dont, if you don't, then why trade them?, their all overpriced ATM.
> 
> Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.



Aha!  So you’re the “carp” in this pond huh?

You’re kind of a contradictory, oDD kind of chap aren’t you?

If as you claim you are aware of “Blowoffs” and how markets trend, why the silly off the cuff “chalk and cheese” comment in the first place when you selectively quoted my post in a somewhat dismissive fashion?

Then you contradict yourself apparently embracing the sentiment of my original comment on how commodities trend in your last post:  







			
				Freeballinginawetsuit said:
			
		

> I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.



Then you contradict yourself AGAIN by attributing a judgemental attitude to me whilst being judgemental.  (Talk about projecting psychosis):


			
				Freeballinginawetsuit said:
			
		

> Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.



I’m sure you’re a trainee psychologists dream for a case study! It’s like a set of those Russian dolls, endless enigma in enigma, but the most amusing thing of all is you just don’t see it, do you “Freeball”?

You’re a funny guy “Freeball”, calling me “little fella” cracks me up.  A mate of mine in my youth used to call me “the little guy” which was kind of a joke since I’m 6ft 3… so I’ll take your label as a term of endearment.


Mag


----------



## constable

Magdoran said:
			
		

> Aha!  So you’re the “carp” in this pond huh?
> 
> You’re kind of a contradictory, oDD kind of chap aren’t you?
> 
> If as you claim you are aware of “Blowoffs” and how markets trend, why the silly off the cuff “chalk and cheese” comment in the first place when you selectively quoted my post in a somewhat dismissive fashion?
> 
> Then you contradict yourself apparently embracing the sentiment of my original comment on how commodities trend in your last post:
> Then you contradict yourself AGAIN by attributing a judgemental attitude to me whilst being judgemental.  (Talk about projecting psychosis):
> 
> I’m sure you’re a trainee psychologists dream for a case study! It’s like a set of those Russian dolls, endless enigma in enigma, but the most amusing thing of all is you just don’t see it, do you “Freeball”?
> 
> You’re a funny guy “Freeball”, calling me “little fella” cracks me up.  A mate of mine in my youth used to call me “the little guy” which was kind of a joke since I’m 6ft 3… so I’ll take your label as a term of endearment.
> 
> 
> Mag



hey mag sure you dont want to replace tarrant as collingwood's fullforward? big fella!


----------



## Magdoran

constable said:
			
		

> hey mag sure you dont want to replace tarrant as collingwood's fullforward? big fella!



Hello constable,


Hahaha… I used to play Aussie rules once upon a time, but had no accuracy kicking, so I wasn’t a good choice for the offence… but I was really fast so I ended up playing in defensive positions.  

The coach used to call me his “secret weapon” giving me missions to mangle the opposition’s front line.  It was great fun in a scramble to get the ball and spirit it away to our star players who could actually kick goals, leaving a “trail of destruction” in the process (kind of exaggerating here, I wasn’t that wanton)!

But thanks for the offer constable! – I’m a bit rusty now.


Regards


Magdoran


----------



## rederob

Mag etc, you are straying off topic!
But as the heading was for "2006" I reckon it's done and dusted.
Do we start a new thread, Joe Blow?
On topic:
In the last 2 months of 2006, China accounted for almost half of its annual zinc exports.
Needless to say, the flood of zinc into the marketplace has affected LME trends.
It will be very difficult for China to maintain the export trend as it was predicated on changes to the tax regime which made rapid divestment of metal more profitable than holding on inventory.
So we are now left with a zinc "overhang" that needs to work itself off.
It's early days, and only a supreme optimist would think that we will soon re-tread the rapid pace of zinc drawdowns that were the theme of most of 2006.
However, LME drawdowns of small but noticeable quantity have recently emerged.  They may be indicative of a change for the better.  But a waiting game is best played for now.
Here's a question for those that short the markets:
If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?


----------



## chops_a_must

rederob said:
			
		

> Here's a question for those that short the markets:
> If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?



I don't short, but on probabilities you would have to say copper, even though drawdowns have become large. Zinc could go either way, that is why I'm staying away for the minute, but nickel... it's almost a one way bet.


----------



## BREND

rederob said:
			
		

> Mag etc, you are straying off topic!
> But as the heading was for "2006" I reckon it's done and dusted.
> Do we start a new thread, Joe Blow?
> On topic:
> In the last 2 months of 2006, China accounted for almost half of its annual zinc exports.
> Needless to say, the flood of zinc into the marketplace has affected LME trends.
> It will be very difficult for China to maintain the export trend as it was predicated on changes to the tax regime which made rapid divestment of metal more profitable than holding on inventory.
> So we are now left with a zinc "overhang" that needs to work itself off.
> It's early days, and only a supreme optimist would think that we will soon re-tread the rapid pace of zinc drawdowns that were the theme of most of 2006.
> However, LME drawdowns of small but noticeable quantity have recently emerged.  They may be indicative of a change for the better.  But a waiting game is best played for now.
> Here's a question for those that short the markets:
> If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?




I'll not short any.

Zinc inventory had gone down recently, seems like China merchants have stopped exporting zinc. If this reversal is sustainable, we might see zinc price rebounding again. Previously I had heard that consumers are willing to buy zinc at $4000. With current zinc price way below $4000 now, I would assume that demand for physical zinc is much higher now in Asia ex China.

Copper inventory had also gone down recently, accompanied with huge rise in cancel warrants. The signal that copper price will continue to fall is less obvious now. There is a strong support level at $5400 (for LME pricing). Seems like China has been buying up copper stocks lately.

To short nickel is damn risky. Nickel has a backwardation of about $2000. To make money by shorting nickel, nickel price has to fall fast and hard in order to cover the huge backwardation. And any news of production disruption will support nickel price again. Xtratrda might be going on strike in Feb 07, too risky to short nickel.

Right now my strategy is to look for opportunity to buy tin and aluminum on dips.


----------



## chops_a_must

These tell an interesting tale:




The last time zinc inventories were at this level, spot zinc prices were at record highs. Now, prices are near their last relative high. It probably provides good value for those looking to buy zinc commercially.


			
				BREND said:
			
		

> Zinc inventory had gone down recently, seems like China merchants have stopped exporting zinc. If this reversal is sustainable, we might see zinc price rebounding again. Previously I had heard that consumers are willing to buy zinc at $4000. With current zinc price way below $4000 now, I would assume that demand for physical zinc is much higher now in Asia ex China.



Brend, is it likely that there will be more ins of zinc in the near future, or has this latest surge been the end of it?


----------



## brerwallabi

BREND said:
			
		

> Seems like China has been buying up copper stocks lately.




"Seems" they are just buying a bit of spot when they need to.

Have you looked at three month fwd contango it "seems" to have been shrinking over the past few weeks despite increasing inventories.


----------



## BREND

chops_a_must said:
			
		

> These tell an interesting tale:
> 
> 
> 
> 
> The last time zinc inventories were at this level, spot zinc prices were at record highs. Now, prices are near their last relative high. It probably provides good value for those looking to buy zinc commercially.
> 
> Brend, is it likely that there will be more ins of zinc in the near future, or has this latest surge been the end of it?




I wish I know if it is now the end of it. But I last heard that there is still a lot of zinc in China, export may stop because price is no longer attractive now.

I will advise not to read too much into brokers' report relating to zinc. I always read from report that zinc demand is strong, contrary to what my customers who are zinc suppliers had told me. They always said zinc demand is very poor, nobody wants to buy at such a high price. At that time, zinc price was above $4000 level. Demand should improve now since price is so low.


----------



## BREND

brerwallabi said:
			
		

> "Seems" they are just buying a bit of spot when they need to.
> 
> Have you looked at three month fwd contango it "seems" to have been shrinking over the past few weeks despite increasing inventories.




My London counterparts have confirmed that it is China who has been buying copper lately. Yes, has been monitoring contango closely as well.


----------



## Magdoran

rederob said:
			
		

> Mag etc, you are straying off topic!
> But as the heading was for "2006" I reckon it's done and dusted.
> Do we start a new thread, Joe Blow?
> On topic:
> In the last 2 months of 2006, China accounted for almost half of its annual zinc exports.
> Needless to say, the flood of zinc into the marketplace has affected LME trends.
> It will be very difficult for China to maintain the export trend as it was predicated on changes to the tax regime which made rapid divestment of metal more profitable than holding on inventory.
> So we are now left with a zinc "overhang" that needs to work itself off.
> It's early days, and only a supreme optimist would think that we will soon re-tread the rapid pace of zinc drawdowns that were the theme of most of 2006.
> However, LME drawdowns of small but noticeable quantity have recently emerged.  They may be indicative of a change for the better.  But a waiting game is best played for now.
> Here's a question for those that short the markets:
> If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?



Geez “crusader” rederob,


So, you don’t think that we can stray a little on these threads once in a while and have a little fun?  What a sterile world we’d live in if the thought police swooped in every time a little tÃªte-Ã -tÃªte eventuated.  This is unusual for you – since when did you become such a killjoy?  Maybe we should rename the thread to “rederob’s corner”?

Do you really object to my reserving the right to occasionally respond to silly adverse comments, and digress with the occasional bit of banter (provided it’s not overdone)?  You’ve done this yourself with Ducati – Glass houses???

Ok, back on topic (once again derailed by the peanut gallery) - Oddly enough my best shot guess currently for the XAO is a bullish drive of some kind into a top around the 24th of Feb (assuming Friday’s low holds), and suspect ZFX may blow off into a top around the 23rd Feb, if the cycle I am using is correct (could also move down into this date if the bullish pattern is not validated). 

But the fly in the ointment is the Zinc chart, where the cycle is ambiguous.  I am still working on this…  Hence I agree with you, it is time to play a waiting game.  It could be that it may try to rally but this could be a counter trend to a corrective move, and may pull back from any highs, or it is possible for it to retest the major high.

As for the other metals, I suspect Nickel may top soon.  In fact, the best cycles I can see tend to indicate that Saturday may be a key time increment (hence this might be the top now), and would expect at least a small pull back ether Monday or Tuesday.  If this is not a major top (the current pattern is very bullish and not the kind I like to enter short on – it is going against the trend), but may yield some sort of pull back if the cycle is correct, a high may also eventuate around 25th Feb (or could be a low).  

Hence watching to see how nickel pans out.  I expect it to pull back for 1-4 counter trend days, but it may actually correct from here if the pattern sets up right.  A lower high (if it does move down Monday night) which fails to take out the current high may have bearish probabilities.

Of course it is too dangerous to even consider shorting an obvious bullish trend at this point, but I’m aware of the potential risk to long positions currently, hence uncommitted.  If the price action confirms a bullish pattern though, and takes out the high (4 or under bearish days would be bullish, depending on how deeply the price moves), this may even try to blow off, hence this may actually be a long, and not a short – the pattern of trend will be the key.

Copper also appears to have a significant date on the 23 Feb too if my reading of the time cycles is correct. Whether this is where a major low would come in, or a counter trend high, or a higher low, I don’t know yet, and this also assumes the cycle is right, but I’m not totally happy with it at the moment.  Technically Copper is still bearish in the daily chart but it may be nearing support and may counter trend bullishly; hence I don’t think I’d be short copper right now with a full position.  There is an outside chance of a capitulation like the recent fall in oil, but this kind of position would be more like a lottery ticket.

In sum, just like you, I’m sitting this out to wait for a good trade…  Next week will be very interesting.  But if copper can’t rally up soon to take out the 11 Jan lower high, we may see a retest of the low, or even a continuation in the bearish movement.  Too hard to call right now, so I’m keeping an open mind.  But if oil can capitulate like it has, so can any of the metals. 


Regards


Magdoran

P.S.  Just out of interest rederob, are you just buying straight shares in ZFX?  You’re not using warrants or options or CFDs are you?  Perhaps you’re using margin?  Mag


----------



## rederob

Magdoran said:
			
		

> Geez “crusader” rederob,
> 
> 
> So, you don’t think that we can stray a little on these threads once in a while and have a little fun?  What a sterile world we’d live in if the thought police swooped in every time a little tÃªte-Ã -tÃªte eventuated.
> 
> Regards
> 
> 
> Magdoran
> 
> P.S.  Just out of interest rederob, are you just buying straight shares in ZFX?  You’re not using warrants or options or CFDs are you?  Perhaps you’re using margin?  Mag



Mag
Stray as much as you like...... it's all good fun.
I just wanted you back on topic - selfishly!
I would see myself as a very interested "investor" who buys and sells FPOs only: The few options I have were "free attaching".
It would be unusual for me to buy a stock and not hold it for 6 months minimum.
With ZFX I see a period of consolidation essential to its ongoing success, so now is as good a time as any to have it.
I have a present downside target of $15.50 and then a less likely $11.50 for the stock.
But I still believe longer term the stock is destined for over $20 on a likely resumption of zinc's inventory drawdown theme in coming months.


----------



## rwkni1

Magdoran said:
			
		

> Yes, but do you understand how markets trend?  You could extend the same kind of theoretical fundamental argument to crude oil, and rail against the recent price action saying it is contrary to your estimations.
> 
> Please do rail all you like.  I just love guys like you who try to catch that falling knife buying a falling instrument while the savvy players are selling short.  You can argue the finer points till you’re blue in the face.
> 
> Brian Price did the same thing for a long time staying short losing $25 odd million dollars during the height of the “dot com” boom, as it turns out later correctly evaluating that the valuations in the market in dot com stocks was way out of wack with the reality… But the timing was wrong.
> 
> Markets can reach ridiculous prices either fuelled by unbridled greed, or driven by frenzied fear and panic.  Just look at the price of oil for a roller coaster ride, or the NASDAQ from 1998-2000.  Try studying those charts for a lesson in market behaviour.
> 
> In simple terms price falls when there are more sellers than buyers…  You don’t have to divine what every person involved was doing, the price action is quite obvious to many technical analysts.
> 
> Don’t get me wrong, I have a very healthy respect for good fundamental analysts, but when markets move, they can often overshoot the mark since they are emotionally driven.  You may consider remembering this and wisely take market sentiment and market behaviour into account rather than rigidly applying a theory.
> 
> Regards
> 
> 
> Magdoran





Magdoran, I understand that market sentiment plays a big role, and clearly the sentiment has been negative for the last few weeks. Where I differ from you, is that I think that sentiment has resulted in the market being oversold (as opposed to being overbought at US$2/lb). I’ve been way overweight in zinc stocks for a couple of years now, and if I had sold everytime there was a shift in sentiment I probably would have missed out on much of the upside. Constantly trading in and out and trying to pick peaks and troughs adds a whole new element of risk as far as I’m concerned – maybe you’re a trader and that’s your game, I don’t know. LME inventories may start heading south tomorrow, or in six weeks, but as far as I can see, all of the available information suggests that stockpile draw-downs will resume. I think it would be more risky for me to take a position that contradicts this information in the hope of a short-term gain. My interpretation of being bullish on zinc is not that prices will roar to $3/lb in the next six months, rather, that prices will consistently outperform analyst forecasts over the next 12 months - at least. By consistently surprising on the upside, analysts will be forced to upgrade their zinc price forecasts ahead of results, resulting in earnings upgrades for zinc producers and share price appreciation. Oh, and as far as I can see Goldman Sachs are bullish on zinc – in their latest release on Base Metal Prices (Jan 10th) they claim they expect to see zinc prices climb back above US$2/lb by mid-FY07 and envisage a supply deficit for the year as a whole.


----------



## Freeballinginawetsuit

Magdoran said:
			
		

> Aha!  So you’re the “carp” in this pond huh?
> 
> I’m sure you’re a trainee psychologists dream for a case study! It’s like a set of those Russian dolls, endless enigma in enigma, but the most amusing thing of all is you just don’t see it, do you “Freeball”?
> 
> You’re a funny guy “Freeball”, calling me “little fella” cracks me up.  A mate of mine in my youth used to call me “the little guy” which was kind of a joke since I’m 6ft 3… so I’ll take your label as a term of endearment.
> 
> 
> Mag




Geez 'Big Fella'

My original quote in question referred to your comparrison of NAZDAQ/POO to Zinc. I must admit I didn't really take note of the rest of youre post (market trends etc), which I should have  . I found the aforementioned comparisons in reference to current Zinc prices silly.... plain and simple. 

As you well know, NAZDAQ is a tech driven index in a different market place and driven by different fundamentals that could certainly not be deemed necessities of the market factors currently driving Zinc ATM.

Oil is a volitile resource, subject to external factors/manipulation within a primary western consumer market, although in the not to distant future by products of China's industrialization will be chomping lots of the black gold, changing the dynamics of this comodity as well.

So I found your comparrisons to current Zinc Spot and Stocks irrelevant.

Personally I have made my opinions felt on the relevant threads regarding Zinc prior to the last correction in November. Whilst others were propents of Blue Sky and praising more room to run for Zinc etc, I was stating take youre profits as a correction was likely.

I also said the total opposite back in June when the market corrected and predicted Zinc and Nickle would run, and stated which stocks were value etc.Again many on ASF didn't share these views

Isn't that what ASF is all about, stating youre opinions for a broader more collected viewpoint  .


The fact of the matter is that Zinc as a commodity and the Zinc stocks in general have had a great year in 07. Most have gone up 300 percent plus. Results for the Dec quarter will be coming out about now and they will be terrific, the larger players will be paying significant dividends and the driving fundamentals behind these stocks are still there. The SP's of the majors may be off 15 odd percent but so what, certainly no reason to liquidate long term positions and trading positions should have gone long ago. Personally I think Zinc will lag a bit behind Nickle for the time being, before another push in a month or two, much the same as the last time around.

Just my opinion and thats all I am offering, certainly not taking the high horse of expertise like yourself.... which certainly led to my assumption of youre 'small man syndrome', regarding youre spoutings

Cheers


----------



## toothfairy

Hi there everyone,

I am just wondering why ZFX & KZL prices behave so differently lately. KZL made profit annoucement today, was it that bad? Or people expect more.

ZFX seems to be back on an uptrend (didn't drop THAT much anyway) but KZL is heading down to test $6.00. Don't they both depend on the same price of Zn & both unhedged & low PE bla bla bla? Actually KZL said it has more exploration potential!
I am starting to buy back ZFX and am hesitant to touch KZL.
Does anyone know why? Is KZL a bargain @ this stage?

Cheers.


----------



## rwkni1

I guess a simple explanation would be from a valuation standpoint. ZFX has been trading around 4x FY06 earnings while KZL was around 8x, so it was much more expensive. KZL probably deserves to trade on a higher multiple given its superior production profile going forward, but maybe the market just deemed it too expensive. Also, KZL is expecting copper output at Thalanga, so earnings will be deflated by the fall in copper prices too.


----------



## BREND

I had posted the relationship between ZFX price against zinc & lead price in my blog:
http://basemetal-trading.blogspot.com/


----------



## BREND

China, the world's biggest producer and user of zinc, was a net exporter of the refined metal in 2006 for the first time in three years, reducing global supply concern that pushed prices to records. China exported 7,000 metric tons more refined zinc than it imported last year, and the country may be a bigger net exporter in 2007. 

I mentioned a few times that China merchants have been exporting zinc to LME in huge amount. But I have seen that the pace of exporting had either stop or stop down.


----------



## michael_selway

BREND said:
			
		

> China, the world's biggest producer and user of zinc, was a net exporter of the refined metal in 2006 for the first time in three years, reducing global supply concern that pushed prices to records. China exported 7,000 metric tons more refined zinc than it imported last year, and the country may be a bigger net exporter in 2007.
> 
> I mentioned a few times that China merchants have been exporting zinc to LME in huge amount. But I have seen that the pace of exporting had either stop or stop down.




Hi so are you bullish or bearish on zinc price in the months ahead?

thx

MS


----------



## BREND

michael_selway said:
			
		

> Hi so are you bullish or bearish on zinc price in the months ahead?
> 
> thx
> 
> MS




I had turned from bearish to cautiously bullish, believe that zinc price is bottoming, but upside will not be huge, and will not be fast. 
Unless copper has a strong rally.


----------



## Kauri

Zinc is at a veeeery interesting stage.... triple bottom on support..there again ABC says it should go lower.....


----------



## michael_selway

Kauri said:
			
		

> Zinc is at a veeeery interesting stage.... triple bottom on support..there again ABC says it should go lower.....




does triple bottom mean bullish or bearish?

thx

MS


----------



## Kauri

michael_selway said:
			
		

> does triple bottom mean bullish or bearish?
> 
> thx
> 
> MS




http://thepatternsite.com/tb.html


----------



## BREND

Zinc price is up today at LME. Partly due to rise in copper, and fall in Zinc inventory.


----------



## BREND

Fall in zinc price at the end of Dec 2006 and early Jan 2007 is due to rising inventory level. This rise in inventory level is partly due to export of zinc into LME warehouse by China merchants.

However based on current lower price of zinc at LME, China merchants had stopped exporting zinc into LME, as the price of zinc in China is higher compared to that of LME. Hence we see that inventory level has started to fall since mid Jan 07.

I think that market is over pessimistic on zinc, price remains weak even though fundamental of zinc had improved. 

As inventory level continues to fall, we should be able to see a recovery in zinc price.

Zinc chart shows that a reversal is possible:
http://basemetal-trading.blogspot.com/2007/01/possible-reversal-for-zinc.html


----------



## Freeballinginawetsuit

Hi Bend,

Well Zinc's not reversing ATM  ,spot prices trending down again today.


----------



## BREND

Freeballinginawetsuit said:
			
		

> Hi Bend,
> 
> Well Zinc's not reversing ATM  ,spot prices trending down again today.




Yes, u are right, seems like my Zinifex is going to drop again tomorrow.  

Bought into Rio Tinto in the morning before earnings announcement, hope that price will fly tomorrow.


----------



## Kauri

BREND said:
			
		

> Yes, u are right, seems like my Zinifex is going to drop again tomorrow.




    Yes pleeeeese...


----------



## toothfairy

Freeballinginawetsuit said:
			
		

> Hi Bend,
> 
> Well Zinc's not reversing ATM  ,spot prices trending down again today.




Check the zinifex website, the POZ has not dropped overnight. Only Kitco said it has! Who to believe?


----------



## Kauri

toothfairy said:
			
		

> Check the zinifex website, the POZ has not dropped overnight. Only Kitco said it has! Who to believe?




   Brend is probably best qualified to answer this.. As far as i understand the ZFX site price is based on the LME price whereas the Kitco site gives 24 hour spot rates, so I guess the timing of the LME updating is what gives the variation between their prices and the spot which is finalised at end of each day.... not 100% on this but that's how I think it goes..    




> LME...The cash contract is updated only twice daily and does not fluctuate during trading hours because it is not actively traded. Only the future months are actively traded and the 3 month contracts receive the highest volume


----------



## BREND

toothfairy said:
			
		

> Check the zinifex website, the POZ has not dropped overnight. Only Kitco said it has! Who to believe?




Price of Zinc did drop last night. And inventory level also rise, so looks like that recovery of zinc might take longer than expected.


----------



## toothfairy

Kauri said:
			
		

> Brend is probably best qualified to answer this.. As far as i understand the ZFX site price is based on the LME price whereas the Kitco site gives 24 hour spot rates, so I guess the timing of the LME updating is what gives the variation between their prices and the spot which is finalised at end of each day.... not 100% on this but that's how I think it goes..



The 24 spot price charts of Kitco do have periods of inactivities daily. When LME is closed, where else do they trade, are they in significant amounts to worry about. If not, Kitco's prices may not be that definitive. LME seems to be more official. That said, I do find that after a couple of days, they do catch up with each other, there is no doubt that POZ is on a down trend, plus or minor a day or so. Please comment.


----------



## Kauri

toothfairy said:
			
		

> The 24 spot price charts of Kitco do have periods of inactivities daily. When LME is closed, where else do they trade, are they in significant amounts to worry about. If not, Kitco's prices may not be that definitive. LME seems to be more official. That said, I do find that after a couple of days, they do catch up with each other, there is no doubt that POZ is on a down trend, plus or minor a day or so. Please comment.




   I'm out of my depth here but I think that the Kitco charts get most of their movement during NY time...Nymex trading hours...


----------



## Kauri

Zinc Heads for Fifth Week of Declines as Stockpiles Increase 

By Brett Foley

Feb. 2 (Bloomberg) -- Zinc headed for a fifth straight week of declines as growing stockpiles and exports from China added to speculation the metal will have a surplus this year. 

China, the world's biggest producer and user of zinc, was a net exporter of the refined metal in 2006 for the first time in three years, Beijing Antaike Information Development Co. said on Jan. 26. Zinc inventories monitored by the London Metal Exchange have increased 11.1 percent this year. 

``Zinc stockpiles have risen this year and Chinese exports have served to dampen the appetite for the once-rising star,'' Michael Skinner, an London-based analyst at Standard Bank Plc said in a report. 

Zinc for delivery in three months on the LME fell $50, or 1.5 percent, to $3,340 a metric ton as of 9:15 a.m. local time. Shares have fallen 21 percent this year. LME-monitored inventories dropped 175 tons to 98,350 tons, the exchange said in a daily report. 

Among other LME-traded metals copper gained $5 to $5,605 a ton. Aluminum slipped $28 to $2,725, nickel rose $50 to $36,900 and lead advanced $20 to $1,685. Tin was unchanged. 

_Last Updated: February 2, 2007 04:23 EST_


----------



## toothfairy

This should be on the ZFX thread but I post it here anyway as it seems to have more actions here.
I know stock prices are beyond reasoning OR am I being too analytical (scientific may be)? POZ is around $15.50 now and if you look back you will see the last time when it was the same price was around 6/10/06. Also note that ZFX share price was around $12.20 (I think before ex dividends) then.
Something must have happened to Zinifex in the last 4 months for it to be trading (still) at around $16.80 now.
Are there anything that I have missed or is it grossly over priced. I have down loaded (sold) 80% of my ZFX shares am hope I am doing the right thing.


----------



## BREND

toothfairy said:
			
		

> This should be on the ZFX thread but I post it here anyway as it seems to have more actions here.
> I know stock prices are beyond reasoning OR am I being too analytical (scientific may be)? POZ is around $15.50 now and if you look back you will see the last time when it was the same price was around 6/10/06. Also note that ZFX share price was around $12.20 (I think before ex dividends) then.
> Something must have happened to Zinifex in the last 4 months for it to be trading (still) at around $16.80 now.
> Are there anything that I have missed or is it grossly over priced. I have down loaded (sold) 80% of my ZFX shares am hope I am doing the right thing.




Fall in metal prices does not mean that miners stocks will fall. Zinc price falls, but the biggest zinc miner in the world - Teck Cominco is still rising. 
Copper has been falling, but Southern Copper share price has been rising to new high, and Phelps Dodges is still strong.

Fyi, demand of zinc in China is rising, and zinc price in China has risen. Fall in zinc price at LME, is due to funds' play. Funds have been selling zinc call options lately.


----------



## eMark

Zinc February 02,07:59 
Bid/Ask 1.4711 - 1.4801 
Change -0.0958  -6.11% 
Low/High 1.4711 - 1.5777


----------



## toothfairy

BREND said:
			
		

> Fall in metal prices does not mean that miners stocks will fall. Zinc price falls, but the biggest zinc miner in the world - Teck Cominco is still rising.
> Copper has been falling, but Southern Copper share price has been rising to new high, and Phelps Dodges is still strong.
> 
> Fyi, demand of zinc in China is rising, and zinc price in China has risen. Fall in zinc price at LME, is due to funds' play. Funds have been selling zinc call options lately.




Well, I don't know those companies that you mentioned in detail but only in names. Are they comparable to ZFX in the sense of :
a) pure play in Zn
b) short live mine (relatively)
c) inexperience in exploration
What I meant is if ZFX sp does not relate intimately with POZ, what other factors are there? Particularly what so different are these factors now compare to 4 months ago?

P.S. POZ is not looking good as I am typing, I am also watching Wagner's Gotterdammerung (downfall of the gods) on DVD, very exciting.


----------



## eMark

Zinc February 02,08:35 
Bid/Ask 1.4507 - 1.4597 
Change -0.1162  -7.42% 
Low/High 1.4507 - 1.5777  

This is like watching a car crash. Looks like I picked the wrong time to BUY ZFX (last Friday, ouch!)


----------



## drmb

Getting worse by the hour - can't watch anymore, what's hapening? From Kitco:
Zinc February 02,08:40 
Bid/Ask 1.4507 - 1.4643 
Change -0.1162  -7.42% 
Low/High 1.4461 - 1.5777


----------



## Kauri

Getting serious now....


----------



## bvbfan

Rumours of a hedge fund blow up around again, this time a base metals fund.

If it's true, which by the price action in metals I'm starting to believe, this may the sign the bulls need to re  enter.

JMHO though


----------



## wayneL

BREND said:
			
		

> Fall in metal prices does not mean that miners stocks will fall. Zinc price falls, but the biggest zinc miner in the world - Teck Cominco is still rising.
> Copper has been falling, but Southern Copper share price has been rising to new high, and Phelps Dodges is still strong.
> 
> Fyi, demand of zinc in China is rising, and zinc price in China has risen. Fall in zinc price at LME, is due to funds' play. Funds have been selling zinc call options lately.




Teck Cominco gapped down along with the rest of the sector this (NY) AM


----------



## Kauri

*Red Kite, Hit by Commodities, Tries to Delay Redemptions *
By Gregory Zuckerman and Alistair Barr 
_ 

2 Feb 11:00_
There is more proof of how volatile it can get for hedge funds that focus on commodity markets.

Red Kite Management Ltd.'s $1 billion metals-trading hedge fund, a highflier that racked up gains last year, has suffered losses so far in 2007. Now Red Kite is asking its investors to give it more notice before they withdraw from the fund.


----------



## drmb

bvbfan said:
			
		

> Rumours of a hedge fund blow up around again, this time a base metals fund.
> 
> If it's true, which by the price action in metals I'm starting to believe, this may the sign the bulls need to re  enter.
> 
> JMHO though




Grim reading - Zinc seems to have fallen 12.5% by my calculation, last trading February 02,14:27 Bid/Ask 1.3962 - 1.4053 

See

http://za.today.reuters.com/news/ne...BS-MARKETS-METALS-20070202.XML&archived=False

Metals dive on report of fund losses
Fri Feb 2, 2007 5:56 PM GMT 
Printer Friendly      

 LONDON (Reuters) - Base metals prices fell sharply on
the London Metal Exchange on Friday on a report of heavy losses
at a hedge fund and in the absence of Chinese buyers, dealers
said.
 "The market is collapsing," a European trader said.
 Three-months zinc fell by nearly 9 percent at one
stage, copper was down by over 6 percent and aluminium dropped by some 3 percent in a general
sell-off.
 Traders said the selling was mostly on behalf of funds,
triggered by a report of heavy losses at a hedge fund that
specialises in metals trading.
 Once prices hit specific chart levels the fall for most
metals accelerated.
 "Fund liquidation...a lot of stops triggered -- a lot of the
stuff on the back of the Red Kite news," the trader said.
 Hedge fund Red Kite, which posted strong gains in 2006, has
suffered a roughly 20 percent loss in the first days of January
and is now trying to stall investors who want to pull money out,
The Wall Street Journal reported.


----------



## eMark

I know this is the Zinc thread. But what are posters thoughts for ZFX & KZL come Monday? Considering the rest of the market appears stable, and after after such a big fall in Zinc?


----------



## clowboy

one thing that would have some influence is that while zinc stocks are up over the last 3 months they are still well down over 6 months, this prob has some influence on ppl


----------



## rederob

eMark said:
			
		

> I know this is the Zinc thread. But what are posters thoughts for ZFX & KZL come Monday? Considering the rest of the market appears stable, and after after such a big fall in Zinc?



They might fall.
They will fall.
They might not rise.
All of the above!
The question is if it's time to now sell and cut losses, or possibly buy back into an oversold market.
Bloomberg keeps reporting about base metals having strongly rising inventories.
So below is the LME 5 year chart for zinc: By most standards the market reaction when compared to the inventory trend is a bit overdone.
That does not mean the market is wrong, just that there will be an upward correction later in the week.


----------



## rederob

Whoops - forgot the chart so deleted prior post...

Note the below chart for LME 5-year copper:
Copper prices did not peak in 2005, when inventories "bottomed".
Prices were higher a full year later.
The effects of backwardation and destocking take a toll on metal prices well after the shift from contango.
I can't guarantee zinc prices will rise, but I can assuredly say that all things being equal there will be a very subdued rise of LME zinc inventories this year, if at all.
That will only change if/when steel consumption fall off the rails.
I will not be selling ZFX this year as I have a reasonably safe entry price, and the stock will continue to give good dividends even if zinc is half today's price.
But that's not the main reason.
I have a very long term view, and while we have a hiccup in prices at the moment, the biggest and best producers, with strong projects in the pipeline, always add value down the track.
If I was on one of the many near term zinc producers, I would have sold in late December, when the technicals and fundamentals suggested "danger" in the near term, and then looked at a later buy back.
That said, nickel looks like holding stronger prices for longer than most other base metals, and it would be there that my $$$s would be spent after it hits a similar 10% price collapse, which it should at some point in coming months.
Otherwise add PDN on its next big dip.


----------



## Kauri

Hi Red, 
I'm not too sure the zinc price is related to the inventory levels this time. Word has been circulating quietly for a little while that a hedge fund was under pressure on its metals book. Last night seems to be verifying the rumour. Look at the vol and price for forward zinc contracts over the last three days, nearly double ave vol on falling price, someone wanted out. What would be interesting would be to see who bought for instance last night, other hedge funds, CTA's, or maybe end consumers... if it was end consumers then a chunk of the zinc metal locked up by the funds has been freed up and transferred to the end user.... what would that spell for future inventory levels?? I am leaning towards a period of volatile instability, similar to gas when that fund folded a little time ago. 
The big question is whether the funds that have other sections of the metals complex tied up are also going to have problems sooner or later???   
As for Zinifex, (zinc and lead producer), I'll be staying short for a little while yet.
     Cheers... Kauri


----------



## toothfairy

I was always a bit dubious about the rumour of Chinese destocking/restocking in Zn price manipulation. Particularly when it was mentioned in the news. Chinese learnt very quickly from western world (especially USA) that you must not let your rivals in business to know exactly what you are doing. That's a universal business rule. I was very surprised that any rumours from China that filters to us could be true. Until now.......
I think the hedge fund Red Kite could be a Chinese fund in disguise. Firstly, no western company will use such a dodgy name for a fund. "Red" means HOT, DANGER & DEFICIT or LOSSES, and as for "kite", any 4 year old kid can tell you that will crash sooner or later. But for the Chinese, "red" represents luck and profit, whether it be red kite, red lantern, red fire crackers or red roast duck. And they all hanging high up for even better feng shui.
Chinese do things differently, red is good and black is bad. Traditional handwriting starts from upper right corner and goes down. Dates are mentioned Year/month/day etc.
May be when they say destocking means restocking & vice versa.
Anyone wants to bet they were restocking heaps @ $1.4 last night?


----------



## BREND

Fall in zinc price is partially due to news that zinc market will be in surplus this year. Not all experts agree with this though. 

The crash yesterday is hedge funds using this news as an excuse to dump zinc futures. As mentioned earlier, funds have been selling zinc call options at strike $3800/mt & $3700/mt for the past 1 week.

Zinc market in China has actually improved, and zinc price in China has actually been rising. Whereas zinc price at LME is falling sharply. Do you call that an opportunity?

As investors of Zinifex, unless you are on margin trading, we can always wait for zinc price to come back up again, time is on our side. Even when zinc price is at $3200 - $3500 level, these zinc miners are still enjoying a fat margin.

Don't forget that Zinifex is also a lead miner, lead is my top pick for 2007. Lead price is still stable. Though lead only made up a smaller portion of Zinifex revenue, but it does help to support share price when lead price is going up: http://basemetal-trading.blogspot.com/2007/01/zinc-share-price-vs-zinc-and-lead-price.html

Teck Cominco and Zinifex, being no 1 and no 2 zinc miners might just slow down their zinc production, hence avoiding a surplus in the zinc market. 

Another reason is also because the market knew that Red Kite is holding on to long position in copper, and hedge funds team up to destroy this fund. Crash in copper price naturally pulls down rest of base metals. 

Metal market is a cruel and merciless market, when they see blood, they attract sharks. And the sharks are fierce, fast and deadly, as we can see yesterday.  

Eventually all this hooha will end, market will stablise, as long as zinc inventory start to fall again, zinc price will recover again.

Just some of my thoughts.


----------



## drmb

toothfairy said:
			
		

> ...... Until now.......
> I think the hedge fund Red Kite could be a Chinese fund in disguise....



 Hmmm, don't thin so - Red Kite is run by Michael Farmer, Oskar Lewnowski and David Lilley.Red Kite fund purchased base metals and had advanced about 108 percent through September - more info needed I think before sepcualting it is Chinese!


----------



## EasternGrey1

BREND said:
			
		

> Metal market is a cruel and merciless market




Aren't they all??


----------



## exgeo

You gotta laugh at some of the crap written by the journos on the subject of metals. For example "LME nickel stocks have doubled over the past month" but with no context. Yeah, doubled from a days' worth of consumption, to 2 days for example!


----------



## rederob

Kauri said:
			
		

> Hi Red,
> I'm not too sure the zinc price is related to the inventory levels this time.
> ...
> Cheers... Kauri



Kauri
I don't think the short term price is ever well correlated to inventory levels.
However, if you compare inventory and price levels of all the base metals over recent years there is a trend that is undeniable.
So my view, whick BREND also shares for what it is worth, is that zinc prices are likely to recover.
Just as the Amaranth fund tanked US gas prices, red Kite has impacted zinc. Please take a look at US natural gas prices (http://www.wtrg.com/daily/gasprice.html) to see how temporary these influences can be.
If you, Kauri, are going to remain short, my bet will be that your position changes before Wednesday.
Good luck.


----------



## Kauri

rederob said:
			
		

> Kauri
> I don't think the short term price is ever well correlated to inventory levels.
> However, if you compare inventory and price levels of all the base metals over recent years there is a trend that is undeniable.
> So my view, whick BREND also shares for what it is worth, is that zinc prices are likely to recover.
> Just as the Amaranth fund tanked US gas prices, red Kite has impacted zinc. Please take a look at US natural gas prices (http://www.wtrg.com/daily/gasprice.html) to see how temporary these influences can be.
> If you, Kauri, are going to remain short, my bet will be that your position changes before Wednesday.
> Good luck.




   Red,
        My short will remain open as long as ZFX trends down, the market action will close it for me, be it wednesday next week or wednesday next month. Incidentally, the price in your gas chart tanked with Amaranth from $8 to $4 over 4-6 weeks, it is now getting back to where it was after 4 months of volatility.
       Cheers
                Kauri


----------



## chops_a_must

I'm having trouble finding what were the final prices and percentages for the base metals. Can anyone help me out here?


----------



## drmb

chops_a_must said:
			
		

> I'm having trouble finding what were the final prices and percentages for the base metals. Can anyone help me out here?



Not sure if this is what you want http://www.kitcometals.com/ is where I always start and then there are live and historical charts for all base metals


----------



## chops_a_must

drmb said:
			
		

> Not sure if this is what you want http://www.kitcometals.com/ is where I always start and then there are live and historical charts for all base metals



That's what I usually use. But everything was saying close to no change which I know isn't true. I just went to the bloomberg commodities bit, but that only has the 3 month contract, not the spots... I think.


----------



## drmb

chops_a_must said:
			
		

> That's what I usually use. But everything was saying close to no change which I know isn't true. I just went to the bloomberg commodities bit, but that only has the 3 month contract, not the spots... I think.



I think the kitcometals 24 hour spot is the NY not the LME price, and the NY price % resets itself at cob, ie 4pm NY time. It's not a 24 hour moving percentage. Could be wrong on the exact time but it does reset at some time after close so that is why it was showing 0.00%. If you had been up 4am you would have seen double digit neg, not a pretty sight. Never seen that before.


----------



## drmb

Didn't we see this sort of drop 1.7 - 1.4 last year? May - July?


----------



## Damuzzdu

chops_a_must said:
			
		

> That's what I usually use. But everything was saying close to no change which I know isn't true. I just went to the bloomberg commodities bit, but that only has the 3 month contract, not the spots... I think.




Chops,

I can tell you that closing cash prices from LME. (US$/tonne)

Official 3269 (taken 13.05pm London time)
Unofficial 3030 (4.17pm London)
Close 3090 (not sure of time not published on basemetals)

The fall started early Friday morning London time. Maybe some traders/hedge funds were aware of Red Kite Problems before the general public knew of it???

When news of Red Kite problems started hitting major internet website like WSJ, Reuters etc the selling just accelerated. The Reuters news story was published on their website at 2.20pm London time can you see the dramatic fall that started just about that time. The WSJ article appeared before the Reuters article, so this would have seen by many that have DOW Jones news headlines tickers going across their screens.

This obviously started the selling and it just got bigger as the afternoon wore on.

Cheers
Muzz


----------



## toothfairy

Damuzzdu said:
			
		

> Official 3269 (taken 13.05pm London time)
> Unofficial 3030 (4.17pm London)
> Close 3090 (not sure of time not published on basemetals)
> 
> Muzz



Can you explain the differences of them please, which one should we take notice of most seriously.


----------



## Damuzzdu

toothfairy said:
			
		

> Can you explain the differences of them please, which one should we take notice of most seriously.




The official price is the one you will see quoted on many websites. It is taken after the AM Kerb, at around 1.10pm London time. It is like a "poll" of 11 firms that deal on the LME. 

However, all the metals then resume trading for the afternoon ring sessions, until the PM Kerb when you get the unofficial prices. This normally happens around 4.15pm London time. 

Trading thou is continuing all the time on "Select" the electronic trading platform for metals on LME until 5.00pm London time when the closing prices are published.

Thus I normally am much more interested in the PM kerb prices and the close than the official prices which is taken really far too early. However the AM Kerb trading is very traditional on LME, that is why you see it used widespread.

It is very similiar to the AM & PM London Gold fixes. But, as we all know Gold is now a 24hr trading commodity across the whole week, so these fixes start to lose their usefulness.

Trust this helps.
Cheers
Muzz


----------



## toothfairy

Damuzzdu said:
			
		

> The official price is the one you will see quoted on many websites. It is taken after the AM Kerb, at around 1.10pm London time. It is like a "poll" of 11 firms that deal on the LME.
> 
> However, all the metals then resume trading for the afternoon ring sessions, until the PM Kerb when you get the unofficial prices. This normally happens around 4.15pm London time.
> 
> Trading thou is continuing all the time on "Select" the electronic trading platform for metals on LME until 5.00pm London time when the closing prices are published.
> 
> Thus I normally am much more interested in the PM kerb prices and the close than the official prices which is taken really far too early. However the AM Kerb trading is very traditional on LME, that is why you see it used widespread.
> 
> It is very similiar to the AM & PM London Gold fixes. But, as we all know Gold is now a 24hr trading commodity across the whole week, so these fixes start to lose their usefulness.
> 
> Trust this helps.
> Cheers
> Muzz




Thanks Muzz. that piece of info is very helpful and it explains neatly why there are so many quotes (sometimes quite gappy as it was on Friday!). I asked this question many times and is answered now.


----------



## Kauri

Hi Chops,
   If you use this site.  http://www.metalprices.com/FreeSite/metals/zn/zn.asp 
you will get the daily LME prices for cash and forward contracts ( in the far right hand side column you can select different metals). Handy for working out backwardation/contango if you're into that. *Also gives meaningfull vol*   . Is updated once daily (in the early hours am our time ) after cob on LME and is what is quoted in most media as the bulk of serious industrial metal trading worlwide occurs on the LME. It differs to the comex and kitco due to cob times. Is easy to set up your own chart in Excell and do analysis, having the vol is invaluable for mine. The Kitco info is good for a general view of the market, but I have never heard it quoted officially or heard of anyone trading off it.
    Cheers...
                Kauri


----------



## rederob

Kauri
As a very quick aside:
Notice that nickel traded volumes have remained firm despite the high price.
Looks like any downside to nickel could be quickly bought into for a nice return.
Any takers for $50k/tonne before the year is done?


----------



## Kauri

rederob said:
			
		

> Kauri
> As a very quick aside:
> Notice that nickel traded volumes have remained firm despite the high price.
> Looks like any downside to nickel could be quickly bought into for a nice return.
> Any takers for $50k/tonne before the year is done?




   Yes, nickel is interesting...if the backwardation gets out to 4.5k-5k I think we could see inventories spike briefly... its at about 3.3k at the moment.


----------



## BREND

Nickel price is driven by falling inventory level. Nickel inventory level is manipulated by hedge fund. And funds have shorted nickel last Friday. 
What does that imply? Leave it to your own judgement.


----------



## wavepicker

YOUNG_TRADER said:
			
		

> Some excellent high quality posting Wave and Redrob,
> 
> Will be interesting to see who's analysis was correct, I agree and am of the same view as Red, however am interested in Waves 5 wave chartist analysis,
> 
> Time will tell gents




Looks like time is starting to show the chartists right again Young Trader. Zinc and ZFX getting thumped, this is obviously some degree of 3rd wave happening.
This is shaping up exactly as expected in posts #543, 545, and 547. This was always a high probability for a fall.

How many techies apart from myself barney were bearish Zinc/ZFX early Jan??? 

Hardly any. Not even most other EW prationers on this site. This is why on occasion not even EW analysis is enough, and wavecounts need to be quantified and alternates narrowed down.


As for the fundementalists they were and still are perma bulls. Looks like they are gonna have to wait a while.
 Rederob, you stated that Zinc would go to 5500 per ton soon back in late Dec.  It was obvious back that this was a low probability scenario and that zinc would see 3000/3500 per ton before 5500.

Cheers 
How many


----------



## rederob

wavepicker said:
			
		

> Rederob, you stated that Zinc would go to 5500 per ton soon back in late Dec.  It was obvious back that this was a low probability scenario and that zinc would see 3000/3500 per ton before 5500.
> 
> Cheers
> How many



I only buy the dips, wavepicker.
If I was buying more zinc then I would have done so today.
Tight markets don't loosen as easily as some think - especially those that have "forecast" a bear market for commodities for 3 years (or more) in a row now.
Just as few forecast nickel would climb to $20k after it fell apart when $17k was first hit, few would forecast zinc can claim $6k this year.  I'm not saying it will, as I don't know that it can double in price given the market's easing.
But to walk away from a bargain is not what good market players do, is it?
I will always play the man if the man is stupid enough to ask for it, but somehow I think you would rather play the ball.


----------



## drmb

Zn stabilising on LME or so it seems, at least does not seem to be in free fall again tonight. 

"Metals melt after Red Kite losses - India Infoline News Service / Mumbai Feb 05, 2007 11:27   The UK-based metal-trading hedge funds US$1bn fund lost 20% in the 12-month ended January 24, the Wall Street Journal reported last week, sending prices on LME into a tailspin 

Zinc, copper and other metal prices have been going downhill in the past few days following news that Red Kite Management Ltd., UK's metal-trading hedge fund, has made heavy losses in a one-billion fund. 
Red Kite's US$1bn fund lost 20% in the 12-month ended January 24, the Wall Street Journal reported last week, sending metal prices on the London Metal Exchange (LME) into a tailspin. 
Red Kite's performance in January was the worst for any month in at least a year, the Wall Street Journal said. One of Red Kite's funds last year gained more than 190% betting on metals, the newspaper reported. 
On Feb. 2, zinc for delivery in three months fell by 9.1%, to US$3,080 per on the LME, the biggest drop since July 1997. Copper for delivery in the three months slumped 4.6%, to US$5,345 a ton, after earlier reaching US$5,250, the lowest since March 27. Aluminum, lead and tin also fell in sympathy. 
Industry analysts say that signs of losses by hedge funds that had poured money into metals during last year's rally may prompt some speculators to cut their holdings, accelerating the decline in prices. But, others say that problems at one hedge fund cannot be taken as signal that metals are a bad investment. 
Meanwhile, Red Kite plans to extend the notice period for redemptions. The investors will now be required to send redemption notices to the fund by February 15 in order to get their money back at the end of the first quarter. 
"Given the current size of the fund we believe that to maintain efficient operation it is necessary to increase the withdrawal notice period," Red Kite said in a statement.


----------



## chops_a_must

drmb said:
			
		

> The investors will now be required to send redemption notices to the fund by February 15 in order to get their money back at the end of the first quarter.
> "Given the current size of the fund we believe that to maintain efficient operation it is necessary to increase the withdrawal notice period," Red Kite said in a statement.



This is a clear signal for me to not get back ino resources until after this date. I'll be waiting to see how things pan out in the second half of the month.


----------



## CanOz

chops_a_must said:
			
		

> This is a clear signal for me to not get back ino resources until after this date. I'll be waiting to see how things pan out in the second half of the month.




You could be missing out on a huge buying opp. As i stated in the KZL thread, what we've seen today looks like a huge capitulation of sellers. The majority of stock in Zincers especially, should be in longer term holders now, so the supply is low, the price must rise.

We will see. 

Cheers,


----------



## nizar

CanOz said:
			
		

> *You could be missing out on a huge buying opp*. As i stated in the KZL thread, what we've seen today looks like a huge capitulation of sellers. The majority of stock in Zincers especially, should be in longer term holders now, so the supply is low, the price must rise.
> 
> We will see.
> 
> Cheers,




Well thats always the risk.
But at the time you never know whether its the beginning of a bear market or one mother of a buying opportunity.

As usual, those crazy punters that take the most risk make the most at the end, like those that bought ZFX for $8 in May (the absolute bottom) or KZL for $2.87 intraday in the same month.

I personally prefer to buy when the trend is back up again.


----------



## chops_a_must

CanOz said:
			
		

> You could be missing out on a huge buying opp.



This is entirely true. However, I prefer to look at lower risk opportunities, and at the moment, leading up until that time, resources could bounce back well, or they could crumble. I'd rather wait for a little while.


----------



## CanOz

nizar said:
			
		

> Well thats always the risk.
> But at the time you never know whether its the beginning of a bear market or one mother of a buying opportunity.
> 
> As usual, those crazy punters that take the most risk make the most at the end, like those that bought ZFX for $8 in May (the absolute bottom) or KZL for $2.87 intraday in the same month.
> 
> I personally prefer to buy when the trend is back up again.




Point taken, "look for confirmation that the trend has changed"

Cheers,


----------



## drmb

CanOz said:
			
		

> Point taken, "look for confirmation that the trend has changed" Cheers,



Well they wouldn't lie on TV would they? On Bloomberg? Would they?? And Adam from MacBank, we can trust him, can't we? (Adam who?) "Zinc Gains in London on Speculation Declines Were Exaggerated By Brett Foley Feb. 5 (Bloomberg) -- Zinc gained in London, rebounding from the largest weekly drop in at least 17 years, on speculation price declines were exaggerated and demand and supply will continue to be closely matched.

The metal used to galvanize steel more than doubled to a record last year amid rising demand from China. Prices on the London Metal Exchange slumped 15 percent last week as analysts including those at Barclays Capital cut 2007 price forecasts. ``We believe the zinc market will remain relatively tight in the first half and we expect a bounce in pricing, although not to levels we saw last year,'' said Adam Rowley, a London- based analyst with Macquarie Bank.


----------



## BREND

CanOz said:
			
		

> You could be missing out on a huge buying opp. As i stated in the KZL thread, what we've seen today looks like a huge capitulation of sellers. The majority of stock in Zincers especially, should be in longer term holders now, so the supply is low, the price must rise.
> 
> We will see.
> 
> Cheers,




I rather buy resources stocks now (that have already fallen so much), than to buy overvalued stocks listed in HK, China or Singapore (that have already risen so much).


----------



## BREND

drmb said:
			
		

> Well they wouldn't lie on TV would they? On Bloomberg? Would they?? And Adam from MacBank, we can trust him, can't we? (Adam who?) "Zinc Gains in London on Speculation Declines Were Exaggerated By Brett Foley Feb. 5 (Bloomberg) -- Zinc gained in London, rebounding from the largest weekly drop in at least 17 years, on speculation price declines were exaggerated and demand and supply will continue to be closely matched.
> 
> The metal used to galvanize steel more than doubled to a record last year amid rising demand from China. Prices on the London Metal Exchange slumped 15 percent last week as analysts including those at Barclays Capital cut 2007 price forecasts. ``We believe the zinc market will remain relatively tight in the first half and we expect a bounce in pricing, although not to levels we saw last year,'' said Adam Rowley, a London- based analyst with Macquarie Bank.




In my view, when we look at metals, we have to access the fundamental, technical and funds' intention. 

Zinc fundamental has indeed improved due to rising demand in China. 
But funds have been selling call options, and chart still look unconvincing. I rather not take a long position on zinc futures now.


----------



## Kauri

drmb said:
			
		

> Well they wouldn't lie on TV would they? On Bloomberg? Would they?? And Adam from MacBank, we can trust him, can't we? (Adam who?) "Zinc Gains in London on Speculation Declines Were Exaggerated By Brett Foley Feb. 5 (Bloomberg) -- Zinc gained in London, rebounding from the largest weekly drop in at least 17 years, on speculation price declines were exaggerated and demand and supply will continue to be closely matched.






drmb... love your humour      They may be right, but they can prove it with their own money, not mine. Even dead cats have been known to bounce. I want to see the cat get up and run...


----------



## nizar

BREND said:
			
		

> Zinc fundamental has indeed improved due to rising demand in China.




I read somewhere that China became a net exporter (of zinc) in 2006 (?)


----------



## dhukka

drmb said:
			
		

> Meanwhile, Red Kite plans to extend the notice period for redemptions. The investors will now be required to send redemption notices to the fund by February 15 in order to get their money back at the end of the first quarter.
> "Given the current size of the fund we believe that to maintain efficient operation it is necessary to increase the withdrawal notice period," Red Kite said in a statement.




These Hedge Fund monkeys are hilarious. That last sentence could be interpreted it as "because the market has gone against us and we are losing money hand over fist we want to change the rules." Imagine if investors long ZFX call options with a Feb expiry asked the ASX if they could postpone that expiry date until March because the market didn't go the way they expected. You'd get laughed at and rightfully so.


----------



## imajica

zinc stockpiles are still extremely low - demand will only increase

even if large deposits are found around the globe it will take many years before these will be mined - the next few years will be bullish for zinc - of course there will be corrections but overall its going up

this hedge fund manipulation is pathetic and will only have an effect on the short term


----------



## BREND

nizar said:
			
		

> I read somewhere that China became a net exporter (of zinc) in 2006 (?)




Only in 2006.


----------



## Magdoran

Zinc 3M:  Daily Chart – Bearish.  I now have a good cycle on this that may be of interest to swing traders out there…

Key dates:  28 Feb, 12 March, 17 April, 23 May. (+/- one trading day).

Key prices for lows - 2744, 2514, 2291

While I’d love to say precisely what may happen, I can’t see this commodity clearly (yet).

I suspect a counter trend rally into either 28 Feb or March 17, then a retest of the low, possibly a new major low around 17 April and/or 23 May.

This assumes an Elliott impulse down, not an “ABC” correction.  I favour an impulse at this point.

I didn’t look at the chart correctly earlier, (I have been pioneering some time/price variants, and have focussed on cycles to develop them – this obscured the obvious pattern of trend) imposing a minor correction into what I saw, not a major impulse onto the chart, hence my cycle analysis was 180 degrees out of sync.  

Timing increments were right, but I got the origin point wrong… translation – this now looks like a bearish campaign to me in Zinc, with the above cycle dates as reference points for tracking the counter trends on the way down.

There may be a bit of sideways activity too – struggling bars up, and strong bars down.

However this is looking in the daily chart.  In the weekly chart, this whole move down may be just a counter trend to the secular bullish campaign.  Long term investors may see this as a dip in the longer term bullish campaign.

Of course I could be totally wrong about all of this, and I am still developing some radical concepts in T/A, hence this is all experimental at this point, and based on analysis of all the metal charts looking for specific patterns – this is still a work in progress.  

Any analysis has its limitations, and Fundamentals that I am not aware of may have an impact I am unable to perceive.  Hence, these preliminary comments should not be used as a guide to trade, but are posted for interested parties who trade technically and swing/position trade.


Regards


Magdoran


----------



## Kauri

wavepicker said:
			
		

> Looks like time is starting to show the chartists right again Young Trader. Zinc and ZFX getting thumped, this is obviously some degree of 3rd wave happening.
> This is shaping up exactly as expected in posts #543, 545, and 547. This was always a high probability for a fall.
> 
> *How many techies apart from myself barney were bearish Zinc/ZFX early Jan??? *
> 
> *Hardly any. Not even most other EW prationers on this site.* This is why on occasion not even EW analysis is enough, and wavecounts need to be quantified and alternates narrowed down.
> 
> 
> As for the fundementalists they were and still are perma bulls. Looks like they are gonna have to wait a while.
> Rederob, you stated that Zinc would go to 5500 per ton soon back in late Dec. It was obvious back that this was a low probability scenario and that zinc would see 3000/3500 per ton before 5500.
> 
> Cheers
> *How many*




   ZFX thread...3 Jan... post 1209..
   ZFX thread...8 Jan....post 1209..
   But for me just starting out in E/W I find it is not about being right as much as it is about being profitable. I enjoy your posts and find them very informative, thanks for sharing your knowledge.


----------



## wavepicker

Kauri said:
			
		

> ZFX thread...3 Jan... post 1209..
> ZFX thread...8 Jan....post 1209..
> But for me just starting out in E/W I find it is not about being right as much as it is about being profitable. I enjoy your posts and find them very informative, thanks for sharing your knowledge.




Just reminding some guys the point I made back then that medium term fundementals lag the market Kauri.

You are very correct, being right is not important. The only exception is when you come under flak for expressing your opinion or posting a chart. I'm sure you know what I mean. 

Apologies, did not see those posts in the ZFX thread, great work.


----------



## toothfairy

wavepicker said:
			
		

> Looks like time is starting to show the chartists right again Young Trader. Zinc and ZFX getting thumped, this is obviously some degree of 3rd wave happening.
> This is shaping up exactly as expected in posts #543, 545, and 547. This was always a high probability for a fall.
> 
> How many techies apart from myself barney were bearish Zinc/ZFX early Jan???
> 
> Hardly any. Not even most other EW prationers on this site. This is why on occasion not even EW analysis is enough, and wavecounts need to be quantified and alternates narrowed down.
> 
> 
> As for the fundementalists they were and still are perma bulls. Looks like they are gonna have to wait a while.
> Rederob, you stated that Zinc would go to 5500 per ton soon back in late Dec.  It was obvious back that this was a low probability scenario and that zinc would see 3000/3500 per ton before 5500.
> 
> Cheers
> How many




I looked at both techies' and foundamentalists' points of view (many from this forum) and I sold out most in Jan and the rest in Feb. Not regretting so far.


----------



## YOUNG_TRADER

Hi Wave picker, congrats on being correct,

I too sold out of all my Zinc plays in Dec 2006, not because of Wave analysis or charting the Commodity but because I noticed the

- Zinc Drawdowns vs Additions balance was shifting ie finally more Zinc was coming in than going out

- I too heard China had become a Net Exporter and I firmly stick to the rule of only stay long what china is short of!


My plays since Dec have been Iron Ore, Nickel, Uranium, Oil and Gold as well (usually combined with other commodity projects) 

ie HLX Gold + Iron Ore + Uranium

BYR Gold + Uranium

etc


----------



## BREND

My feel that the fall in zinc price was overdone. Zinc demand has actually picked up in China after the sharp fall. However metal prices at LME are currently controlled by hedge funds, with funds selling zinc call options, $3700, Mar 07, looks like they will not allow the price to rise too much before the option expiration date in Mar 07. Looking from a longer term perspective, zinc price does look cheap now.


----------



## michael_selway

YOUNG_TRADER said:
			
		

> Hi Wave picker, congrats on being correct,
> 
> I too sold out of all my Zinc plays in Dec 2006, not because of Wave analysis or charting the Commodity but because I noticed the
> 
> - Zinc Drawdowns vs Additions balance was shifting ie finally more Zinc was coming in than going out
> 
> - I too heard China had become a Net Exporter and I firmly stick to the rule of only stay long what china is short of!
> 
> 
> My plays since Dec have been Iron Ore, Nickel, Uranium, Oil and Gold as well (usually combined with other commodity projects)
> 
> ie HLX Gold + Iron Ore + Uranium
> 
> BYR Gold + Uranium
> 
> etc




Do you think Zinc will do a lead? i.e. fall big then rise bigger?

thx

MS


----------



## BREND

Posted 2 new articles on zinc in my blog today:
http://www.basemetal-trading.blogspot.com/

Hopefully Zinifex recovers tomorrow, and BHP reports earnings that outperformed analysts' expectation.

Cheers!


----------



## drmb

BREND said:
			
		

> My feel that the fall in zinc price was overdone. Zinc demand has actually picked up in China after the sharp fall. However metal prices at LME are currently controlled by hedge funds, with funds selling zinc call options, $3700, Mar 07, looks like they will not allow the price to rise too much before the option expiration date in Mar 07. Looking from a longer term perspective, zinc price does look cheap now.




The following is really good reading (he must have a good speech writer or else maybe he really is good) "Zinc Briefing Presentation by Mr Greig Gailey" http://www.zinifex.com/UploadZinife...c Conference_6 February 2006_read version.pdf
Read, enjoy!


----------



## chops_a_must

The volatility of base metal prices over the last week has been incredible. 3, 4, 5% each night, either way seems like nothing. Good luck to everyone hanging on!


----------



## drmb

chops_a_must said:
			
		

> The volatility of base metal prices over the last week has been incredible. 3, 4, 5% each night, either way seems like nothing. Good luck to everyone hanging on!



Volatile for sure: from Bloomberg
Copper Leads a Decline in Metals in London as Stockpiles Swell  By Brett Foley Feb. 8 (Bloomberg) -- Copper fell for a second consecutive day in London, leading metals including zinc and nickel lower, on speculation that rising stockpiles signal that production is now exceeding demand. 

Copper stockpiles monitored by the London Metal Exchange are close to a three-year high. Banks including Barclays Capital and UBS AG about a week ago cut their price forecasts for metals such as copper. Supplies of the metal will exceed demand by about 200,000 metric tons this year, UBS said, an amount almost equal to all the stocks in warehouses monitored by the LME. 

``Rising stockpiles continue to remain a negative over the market,'' said Roy Carson, a London-based trader at Triland Metals Ltd., one of 11 companies trading on the floor of the LME, the world's largest metals bourse. 

Copper for delivery in three months on the LME dropped $125, or 2.3 percent, to $5,300 a ton as of 10:09 a.m. local time. That's the lowest compared with closing prices since March 2006, and 40 percent less than the record $8,800 reached in May. 

*Among other metals for delivery in three months on the LME, zinc fell $80, or 2.5 percent, to $3,090 a ton. The metal, used to galvanize steel, has dropped 27 percent this year, the worst performer on the exchange. * 

Bother!


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## imajica

the fall in the zinc spot price will only be temporary - stockpiles are still at all time lows and there is a projected increase in use of the metal  - major new mines won't be coming on line for ages


if the spot price is depressed, it's being manipulated by people who have a vested interest in keeping the price artificially capped


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## drmb

imajica said:
			
		

> the fall in the zinc spot price will only be temporary - stockpiles are still at all time lows and there is a projected increase in use of the metal  - major new mines won't be coming on line for ages if the spot price is depressed, it's being manipulated by people who have a vested interest in keeping the price artificially capped



Interesting article at http://www.kitco.com/ind/Dorsch/feb072007.html by By Gary Dorsch  February 7, 2007  www.sirchartsalot.com Lots of intersting stuff! Includes ….. “Until January, zinc was closely tracking Chinese steel exports, as the good way to gauge Chinese demand for zinc.  But the tight relationship has broken down, over the past two months, possibly a signal of global economic slowdown. On the other hand, the decline in zinc might just be a blow-off of speculative froth from hedge funds, and the market must gauge where industrials users will step in to buy the metal and provide a solid base of support”


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## Kauri

imajica said:
			
		

> the fall in the zinc spot price will only be temporary - stockpiles are still at all time lows and there is a projected increase in use of the metal - major new mines won't be coming on line for ages
> 
> 
> if the spot price is depressed, it's being manipulated by people who have a vested interest in keeping the price artificially capped



  Bloody Warick Capper, he's everywhere!!!!





The LME only works a daily session compared to Kico which is a 24 Hr spot quote, hence the different % quoted. 


> LONDON, Feb 8 (Reuters) - London Metal Exchange zinc dropped 6 percent on Thursday to touch phychological support at $3,000 per tonne as funds sold.
> 
> *The longs seem to be giving up, a trader said.*
> 
> By 1230 GMT zinc <MZN3> was at $3,025/3,045 versus $3,190 in the previous session.


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## rwkni1

Prices closed down 1.6% at $1.42/lb.
For the few bulls left out there, interesting to note that stockpiles have been drawn-down for 4 consecutive days now - off 3% in the past week.
I think the next month post-Chinese new year will definately set the tone for the next 6 months.


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## Halba

zinc stockpile drawdowns nearly 1000t a day

at this rate will be at 60,000t in a couple of months


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## Kauri

Not too sure but it seems that Zinc on the LME, where the bulk of the worlds metal funds operate, is being sold down, only to recover a bit on the US exchange where the smaller punters operate???


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## rwkni1

Where is zinc traded in the US? I'm pretty sure its not on Comex or Nymex....


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## Kauri

rwkni1 said:
			
		

> Where is zinc traded in the US? I'm pretty sure its not on Comex or Nymex....




As I said I am not too sure, as apart from Gold I don't trade metals, I only follow them in relation to mining shares... maybe someone who trades them could explain how it all works?? I also read somewhere that Shanghai will be trading Zinc futures soon???



> COMEX Electronic Metals Futures Move to CME’s Globex.



​


> ​Comex electronic metal futures will begin trading on the CME Globex system the
> 
> evening of Sunday December 3, 2006. Where applicable, these electronic contracts will
> 
> trade side-by-side with their pit traded contracts providing nearly 24 hour access to these
> 
> markets. Below are the QT Symbols, they can also be found in QT's
> 
> London​LA: Comex/CME Globex London ALUMINUM 10 metric tons​LK: Comex/CME Globex London COPPER 5 metric tons​LZ: Comex/CME Globex London ZINC 10 metric tons​​​



​


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## BREND

rwkni1 said:
			
		

> Where is zinc traded in the US? I'm pretty sure its not on Comex or Nymex....




Zinc is traded at London Metal Exchange. I'm a metal broker, if you open account with my employer (bank), you can trade zinc.


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## sam76

BREND said:
			
		

> Zinc is traded at London Metal Exchange. I'm a metal broker, if you open account with my employer (bank), you can trade zinc.





Ummm I no base metals expert, but it seems tha the LME stockpiles are falling.  Are we going to see a short term rise in Zinc stocks like ZFX?

The reason I ask is that upon my brokers advice I bought some ZFXDM3 for a short term trade...


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## BREND

sam76 said:
			
		

> Ummm I no base metals expert, but it seems tha the LME stockpiles are falling.  Are we going to see a short term rise in Zinc stocks like ZFX?
> 
> The reason I ask is that upon my brokers advice I bought some ZFXDM3 for a short term trade...




Your inventory chart is not up-to-date. Zinc inventory rises 2550mt today. But zinc price still rise. I think zinc is undervalued now.

I had written in my blog that when we access metals, we have to look at fundamental, technical, and funds' intention. Fundamental is only one of them.


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## brerwallabi

Right now the miners and the smelters are doing a fair bit of negotiating for treatment charges,so with zinc prices recently at incredible highs there would certainly be a benefit to the miners to bring the price down.
I think I would want to be seeing $1.40 right now and LME inventories holding steady.


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## michael_selway

brerwallabi said:
			
		

> Right now the miners and the smelters are doing a fair bit of negotiating for treatment charges,so with zinc prices recently at incredible highs there would certainly be a benefit to the miners to bring the price down.
> I think I would want to be seeing $1.40 right now and LME inventories holding steady.





its a good case scenario for zinc, like maybe that the big fall in zinc price is a good thing, i.e. for LME supplies to fall further first, before zinc price rises later?

thx

MS


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## imajica

hope this attachment works

looks like zinc has bottomed - will rise from here as stocks diminish


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## michael_selway

imajica said:
			
		

> hope this attachment works
> 
> looks like zinc has bottomed - will rise from here as stocks diminish




yeah the fall in zinc price is actulally a good thing, it will make LME stocks drop

thx

MS


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## mango65

Well Zinc today is having a really good price movement.  Go the zinc stocks.


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## vishalt

Zinc 	April 09,21:56
Bid/Ask 	1.6369 	- 	1.6505
Change 	+0.0975 		+6.34%
Low/High 	1.5393 	- 	1.6505

ROFL, 6%, CAPPED @ DAILY LIMIT

Zinfiex is a win!


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## dj_420

ok guys zinc looks like its on the move again

it seems china was unable to stop the inevitable and zinc stocks continue to plunge. CBH, ZFX, KZL and now soon to be producing JML looking great. JML have held up very well and are 10% or so off their highs. but i now see large upside in KZL.


China's Zinc Exports May Plunge, Boosting World Price (Update4) 

By Xiao Yu

May 10 (Bloomberg) -- China, the world's biggest producer and consumer of zinc, may slash exports of the metal this quarter, supporting near-record prices, traders and analysts, including Feng Juncong of Beijing Antaike Information Development Co., said. 

Net exports of refined zinc may drop as much as 45 percent to between 50,000 and 60,000 metric tons in the three months ending in June, as domestic demand is growing and the government is discouraging overseas sales, Feng said by phone today. Net zinc exports were 90,260 tons in the first quarter. 

A decline in record overseas sales by China, which consumes a third of the world's zinc, may drive global prices toward last November's record of $4,580 a ton or even higher, said Yang Yinghui, a trader at Cofco Futures Co. from Beijing. China is trying to curb metal exports to reduce its trade surplus and rein in capacity growth in energy-intensive and polluting industries. 

``The sharp increase in zinc exports is a concern, and the government will probably remove the tax rebate to slow export growth,'' Zhou Guobao, head of the zinc and lead department of China's Nonferrous Metals Industry Association, said by phone May 8. He didn't say when the tax rebate might be scrapped. 

China, the world's fastest-growing major economy, became a net exporter of zinc in 2006 for the first time in three years, reducing global supply concern that pushed prices to records. Zinc is used to galvanize steel, helping to prevent rusting of products such as nails, house frames and car parts. 

Exports Surged 

China's exports of zinc rose more than fourfold in the first quarter from a year ago to 153,507 tons, while imports fell 51 percent to 63,247 tons, customs data showed. Singapore, Italy and the U.S. were the biggest buyers, according to the data. 

Exports soared after prices in London rose to a record, making shipments profitable for Chinese producers such as Hunan Zhuye Torch Metals Co., China's biggest zinc producer. Production growth in China also contributed the surge in exports. 

China is now in the peak demand period for construction and prices of the metal are rising. The benchmark London Metal Exchange zinc price, which rose 31 percent in the past three months on dwindling global stockpiles, reached $4,170 on May 4, the highest since Jan. 3. 

The contract for delivery in three months fell $25, or 0.6 percent, to $4,065 a ton at 4:30 p.m. Shanghai time today. 

Zinc for July delivery on the Shanghai Futures Exchange, which has risen 19 percent since the contract was introduced on March 27, closed 0.5 percent higher at 34,710 yuan ($4,511) a ton. 

Prices Rise 

Global prices may ``be surprisingly good'' this month driven by increased investment by funds and slowing Chinese exports, said Cofco's Yang, who forecasts zinc rising above $4,600 a ton. Some other traders, including Li Ling of Star Futures Co., echoed such price estimates. 

``We expect to see Chinese export orders drop significantly from May,'' said Shen Haihua, vice president at Maike Futures Co. by phone from Shanghai. Zinc prices may hover around $4,300 to $4,500 this month, he said. 

The government, which wants to ensure that domestic supplies are sufficient to meet rising demand, may reduce or cancel rebates on the 17 percent value-added tax for some metal exports. 

It may remove the 5 percent tax rebate on exports of zinc of 99.995 percent purity, which can be delivered on the London Metal Exchange, in the first half of this year, Antaike's Feng said at a seminar in Shanghai April 5. Tax rebates for some steel products were removed last month. 

``Fundamentals don't seem to support zinc rising to a record, but other metals such as copper, have risen significantly, and the investment funds' enthusiasm hasn't weakened, so I couldn't rule out the possibility that zinc will rise to a record this quarter,'' Feng said. 

``Net exports of refined metal from China have slowed and we remain unconvinced that there are substantial inventories of metal that could be used to boost exports,'' Robin Bhar, an analyst at UBS AG, said in a research note on May 4. 

Global stockpiles of zinc in warehouses monitored by the London Metal Exchange have fallen to 86,700 tons, the lowest since Dec. 15, the exchange said today.


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## UMike

Zinc stocks down about 3% today

Zinc  	83725  	-2025

hopefully the price will go up abit.


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## Magdoran

UMike said:


> Zinc stocks down about 3% today
> 
> Zinc  	83725  	-2025
> 
> hopefully the price will go up abit.



Funny, I make the LME movement in Zinc currently up 20 points to 3955 (up 0.50%), but had moved down as far as 3890 (-1.14%).

This looks (currently before close) like a reversal to me, and could signal a resumption of the bullish drive.

There is support in time and price as indicated in the attached chart.  If this is a reversal as I suspect it is (or near to this level and time), this should yield a strong bullish drive into the 21 May (or beyond – hence have to see how Zinc moves into this date).


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## UMike

I'd say there is a difference between stock levels and price.

Anyway I'm gonna ignore the 2006 thread and post in the 2007 thread from now on.

(That is If a mod doesn't merge it in the meantime)


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