# Zinc - The Metal for 2007



## imajica

Hey all,
           a new zinc thread for a new year. 

I'll start off by posting today's zinc price - it looks as if it has turned and is heading North again


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## BREND

Yippie! I believe zinc is still an undervalued metal. 

As I mentioned earlier, demand of zinc in China has picked up. And now some funds believe that base metal demand will rise after Chinese New Year, so they bought up metal futures before the Chinese holidays. This is why base metals across the board are up lately.

But I believe aluminum price has overrun its fundamental, provides a good opportunity to short this metal:
http://basemetal-trading.blogspot.com/2007/02/short-aluminum-at-2836.html


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## michael_selway

BREND said:
			
		

> Yippie! I believe zinc is still an undervalued metal.
> 
> As I mentioned earlier, demand of zinc in China has picked up. And now some funds believe that base metal demand will rise after Chinese New Year, so they bought up metal futures before the Chinese holidays. This is why base metals across the board are up lately.
> 
> But I believe aluminum price has overrun its fundamental, provides a good opportunity to short this metal:
> http://basemetal-trading.blogspot.com/2007/02/short-aluminum-at-2836.html




Hi thanks

btw were u bullish on Aluminum recently? or am i wrong?

thx

MS


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## imajica

zinc up again - the upward trend continues


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## BREND

michael_selway said:
			
		

> Hi thanks
> 
> btw were u bullish on Aluminum recently? or am i wrong?
> 
> thx
> 
> MS




No aluminum looks good to short now, with a stop loss level at $2900.
Aluminum and copper are the weakest among the base metal in my view.

My favourites are still lead and tin. Look at where they are today.


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## imajica

zinc pushing ever higher - looks like another bull run


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## BREND

michael_selway said:
			
		

> Hi thanks
> 
> btw were u bullish on Aluminum recently? or am i wrong?
> 
> thx
> 
> MS




I think you have mixed up on my views. I suddenly remember I did say aluminum is my 3rd favourite metal, and this is correct because this metal has risen for the past months. But I think it has reached the peak already.


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## rwkni1

Aluminium prices have been tracking between $1.20 and $1.30/lb for the past 3 months. What sort of upside were you expecting?


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## BREND

rwkni1 said:
			
		

> Aluminium prices have been tracking between $1.20 and $1.30/lb for the past 3 months. What sort of upside were you expecting?




Aluminum price should go down now.
http://basemetal-trading.blogspot.com/2007/02/review-on-my-aluminum-trade.html


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## michael_selway

BREND said:
			
		

> I think you have mixed up on my views. I suddenly remember I did say aluminum is my 3rd favourite metal, and this is correct because this metal has risen for the past months. But I think it has reached the peak already.




ic, so you were onyl ST bullish on aluminium

thx

MS


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## Wysiwyg

I have this on going problem...what I want and what is are always different.


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## BREND

China will draw out a lot of zinc inventory from LME warehouse soon. :


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## michael_selway

BREND said:
			
		

> China will draw out a lot of zinc inventory from LME warehouse soon. :




how many tonnes in what exact time frame?

thx

mS


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## BREND

michael_selway said:
			
		

> how many tonnes in what exact time frame?
> 
> thx
> 
> mS




I suspect there are more than 10,000mt of zinc waiting to be drawn out by China merchants. May not be drawn in one time, can be in batches.  

But the owner of the inventory can change their mind. Time period should be within 1 month, reason for the length is due to 2 weeks Chinese New Year holiday in China.


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## brerwallabi

Chinese trdaers dumped 39,000 tons of zinc on the market in December as they wanted to make the most of the high prices at that time and make the most of the last few weeks of the year before the government introduced a 5% tax on the export of zinc of lower grade - effective January 1st.
Chinese smelters are on the increase and demand is still expected to grow this year, when the Chinese NEW YEAR is over expect LME stocks to further decline and Australian zinc stocks to appreciate.

When are new major mines coming onstream to meet the demand - looks like mid 2008 before supply exceeds demand.

Zinc still the metal of the year as far as gains for Australian miners.
ZFX, PEM, CBH, KZL all set for even more gains.


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## MiningGuru

Zinc up a lot over the weekend and today.

I expect this to continue and a further strong recovery of Zinc stocks, ZFX, KZL and others.


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## BREND

MiningGuru said:
			
		

> Zinc up a lot over the weekend and today.
> 
> I expect this to continue and a further strong recovery of Zinc stocks, ZFX, KZL and others.




Zinc inventory down 1125mt today. I believe more upside for zinc, still holding on to my ZFX.


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## Kauri

Has anyone heard about this mob? Why aren't they listing here??



> *The Express... 26 Feb 07*
> 
> An Australian zinc miner with world class ambitions is gearing up for production by floating on Aim next month.
> 
> Zeehan Zinc, which has interests in *western Tasmania*, owns exploration licences and mining leases in areas next to regions proven to be rich in natural resources.
> 
> It bought the licences when commodity prices were cheap in the late 1990s and early 2000s.
> 
> Zeehan, advised by Libertas, is looking to raise GBP9.5million from the March 6 listing.
> 
> Investors include specialist investment group RAB Capital which is not selling in the float.
> 
> Chief executive John Pollard says one mine, Comstock, is to come into production within eight weeks of listing.
> 
> *Starting with 200,000 tons annually, moving up to 800,000 in each of the next two years,* it will have a mine life of more than five years with reserves of 4.7million tons.
> 
> It will cost $0.61 to mine each pound of zinc.
> 
> Pollard is confident of finding more metals in the ground. The group also has two exploration projects being developed.
> 
> We could be a worldclass mining group,  he predicted.
> 
> There is mining and processing equipment on-site and the state government of Tasmania has already built a road.
> 
> Pollard added: We are confident of increasing our resource base through further exploration activity, which will provide investors with potentially very attractive upside in the future.


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## Freeballinginawetsuit

To mine that quick.......sounds like rehashing an old mine, add to that some fresh exploration leases... and there's your new AIM listing LOL  . 

The Comstock location rings a bell?.


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## Magdoran

Current Zinc chart...


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## vishalt

Yeah i'm favouring Zinc this year.. ZFX performance is just mindblowing, and considering its giving a massive 70 cent dividend! I'm building up my shares in ZFX, with light positions in BHP and other defensive stocks. 

Any targets for ZFX in 07/08?


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## BREND

vishalt said:
			
		

> Yeah i'm favouring Zinc this year.. ZFX performance is just mindblowing, and considering its giving a massive 70 cent dividend! I'm building up my shares in ZFX, with light positions in BHP and other defensive stocks.
> 
> Any targets for ZFX in 07/08?




My target is AUD27 in 2008. When zinc supply in China drys up, zinc price will fly again. ZFX also supplies lead and silver, I expect them to rise further in 2007.


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## Sanhedrin

Brend do you have some details on the Chinese
zinc mines, what are their expected mine life how 
many years, and what tonnage remains to be pulled out on the dirt?


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## UMike

*Back near the 1.60 mark*





*Stocks are on the way down.*


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## UMike

Hopefully Zinc miners SP will go up


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## BREND

Sanhedrin said:
			
		

> Brend do you have some details on the Chinese
> zinc mines, what are their expected mine life how
> many years, and what tonnage remains to be pulled out on the dirt?




Bad news, zinc demand in China is very bad now. 

There is 50,000mt of zinc parked in Shanghai warehouse. Possibly waiting for LME price to rise, then export to LME. Then we may see sharp rise in zinc inventory again, and price plunged. 

The only remedy is: demand for zinc in China to pick up. Have not seen this yet.


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## UMike

8:14 US time Base metals dropped as can be seen by the Nickel chart below.

Zinc still held up to finish in positive territory.


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## rwkni1

BREND said:
			
		

> Bad news, zinc demand in China is very bad now.
> 
> There is 50,000mt of zinc parked in Shanghai warehouse. Possibly waiting for LME price to rise, then export to LME. Then we may see sharp rise in zinc inventory again, and price plunged.
> 
> The only remedy is: demand for zinc in China to pick up. Have not seen this yet.




50,000mt of zinc is a lot. Do you mean 50kt?


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## rwkni1

rwkni1 said:
			
		

> 50,000mt of zinc is a lot. Do you mean 50kt?




Aplogies, i see you meant 50,000 metric tonnes.
Well, if that's the case the zinc market could really be up the cack if LME starts trading at a premium to Shanghai zinc.


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## Halba

Is that the same thing as normal tonnes i.e. 50,000t?


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## Kauri

Halba said:
			
		

> Is that the same thing as normal tonnes i.e. 50,000t?




I think *mt* may be metric tonnes?? as opposed to imperial tons??


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## Halba

Yep its different. So how much is it imperial?


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## Kauri

Halba said:
			
		

> Yep its different. So how much is it imperial?




Much the same.
1 tonne = 2205 pounds...
1 ton = 2240 pounds...


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## rwkni1

Kauri said:
			
		

> Much the same.
> 1 tonne = 2205 pounds...
> 1 ton = 2240 pounds...




Whenever you see someone quote tonnes in terms of metals its always metric. 

BREND, any chance of divulging your source for this China number? Because if there is 50kt of zinc sitting in Shanghai it would change my whole outlook on zinc.


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## vishalt

Big/speculative call there Brend.


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## rwkni1

Yeah, I don't know how much to believe, but if his source is accurate the zinc market is in a lot of trouble. There is still a premium on LME zinc over Shanghai, not as much as in December and January, but its still there. This should induce some of that material into the Singapore warehouse if there is 50kt just sitting idle in Shanghai. Be interesting to see what happens over the next week or two.


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## Halba

What I don't like is somebody has quoted a remarkable figure: 50,000t of zinc without quoting a source. Moderator if you are there could you send a PM to Brend.

The total available zinc stockpiles r only 90,000t. So to quote 50,000t WITHOUT a source leaves me sceptical.


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## BREND

rwkni1 said:
			
		

> What I don't like is somebody has quoted a remarkable figure: 50,000t of zinc without quoting a source. Moderator if you are there could you send a PM to Brend.
> 
> The total available zinc stockpiles r only 90,000t. So to quote 50,000t WITHOUT a source leaves me sceptical.




This information is from my UK counterparty. Yes, it is 50,000mt. 
The only hope of recovery in zinc price is: rise in demand of zinc in China.
I still holding onto Zinifex, I also hope that zinc price will rise.


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## Gundini

BREND said:
			
		

> This information is from my UK counterparty. Yes, it is 50,000mt.
> The only hope of recovery in zinc price is: rise in demand of zinc in China.
> I still holding onto Zinifex, I also hope that zinc price will rise.




So please correct me if I'm wrong, but does this mean the currnet LME level of 91,000mt is soon to increase to 141,000mt once the Chinese see a price per pound that is profitable for them? 

The last time there was this quantity available in LME was Sept/Oct 2006, and Zinc price was around the $1.55 as is now. 

So surely this addition to the inventory will put pressure on the price of Zinc, even though they were trading at the same price in Sept/Oct 2006.

And given the demand fall off you mentioned in China, why would you hold ZFX? 

Wouldn't you sell ZFX, and buy back cheaper after the fall in Zinc prices?


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## Halba

> posted by Brend in Feb
> 
> Re: ZINC - The Metal for 2007
> 
> --------------------------------------------------------------------------------
> 
> Yippie! I believe zinc is still an undervalued metal.
> 
> *As I mentioned earlier, demand of zinc in China has picked up. And * now some funds believe that base metal demand will rise after Chinese New Year, so they bought up metal futures before the Chinese holidays. This is why base metals across the board are up lately.
> 
> But I believe aluminum price has overrun its fundamental, provides a good opportunity to short this metal:
> http://basemetal-trading.blogspot.c...um-at-2836.html





What has changed in 2 weeks Brend? If you believe in the decade long commodity cycle, day to day fluctuations shouldn't bother


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## BREND

Halba said:
			
		

> What has changed in 2 weeks Brend? If you believe in the decade long commodity cycle, day to day fluctuations shouldn't bother




I'm optimistic on commodity, but not the whole group of resources, just those that have limited supply and rising demand. 

Mainly optimistic on lead and nickel now:
http://basemetal-trading.blogspot.com/2007/03/industrial-metal-prices-advance-in.html

Yes, I'll still hold on to ZFX, commission is too high in Australia market for me to trade in and out. And also because ZFX supplies lead and silver as well, which I'm optimistic about too. 

There are reports saying the exports of zinc from China is not sustainable, which I believe so, the supply will dry up in time to come, but I do not know when.


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## BREND

A federation of unions at Peru's largest zinc producer Volcan Compania 
Minera on Friday will present a strike notice for March 19 in the absence of 
an agreement with management over profit sharing and other issues, a union 
leader said Thursday. 
     "We are going ahead with the strike notice," federation leader Fidel 
Reginaldo told Platts. 
     "The company had failed to distribute all of the 8% of profits to workers 
as required by law, Reginaldo said. He added that the company had not honored 
an agreement reached last September to reinstate unionized workers in jobs 
being performed by sub-contracted workers. 
     Unionized workers at the mine total 1,600. Sub-contracted workers, around 
3,000, also plan to walk off their jobs, Reginaldo said. 
     Officials at Volcan were unavailable for comment. 
     Locally-owned Volcan operates the mines of Cerro de Pasco, Carahuacra, 
San Cristobaland Andaychaugua in the central Andes.


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## Halba

zinc. copper, lead stockpiles all down

looks good, stronger for longer


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## Halba

I must admit you are well researched Brend. Do you use Basemetals.com?


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## rederob

BREND said:
			
		

> There are reports saying the exports of zinc from China is not sustainable, which I believe so, the supply will dry up in time to come, but I do not know when.



There are about 4 months worth on present inflow/outflow data.
Destocking is a dangerous game.
China has again been caught out on copper this time, having got nickel very badly wrong in 2005.
Lead will get a slight boost from ZFX Port Pirie smelter outage, but depends how long it will last as to impact.
From an LME perspective, zinc remains in very precarious balance, with downside to inventory most likely on present global IP continuation.


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## BREND

Halba said:
			
		

> I must admit you are well researched Brend. Do you use Basemetals.com?




Halba, I'm a metal dealer, reading on metal news is my job.
I read all kind of news that I can get, whether its from internet, bloomberg, reuters, clients, suppliers, London, anywhere!


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## BREND

rederob said:
			
		

> There are about 4 months worth on present inflow/outflow data.
> Destocking is a dangerous game.
> China has again been caught out on copper this time, having got nickel very badly wrong in 2005.
> Lead will get a slight boost from ZFX Port Pirie smelter outage, but depends how long it will last as to impact.
> From an LME perspective, zinc remains in very precarious balance, with downside to inventory most likely on present global IP continuation.




That's right!

Rederob, I'm not familar in the Australia market, except the usually famous ones like BHP, Rio, ZFX. Do you know of any good nickel mining stocks to invest?


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## Halba

Nickel producers on ASX-

Jubilee, Minara, Salay Malay, Mincor


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## BREND

Halba said:
			
		

> Nickel producers on ASX-
> 
> Jubilee, Minara, Salay Malay, Mincor




Thanks!


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## Gundini

Gundini said:
			
		

> So please correct me if I'm wrong, but does this mean the currnet LME level of 91,000mt is soon to increase to 141,000mt once the Chinese see a price per pound that is profitable for them?
> 
> The last time there was this quantity available in LME was Sept/Oct 2006, and Zinc price was around the $1.55 as is now.
> 
> So surely this addition to the inventory will put pressure on the price of Zinc, even though they were trading at the same price in Sept/Oct 2006.
> 
> And given the demand fall off you mentioned in China, why would you hold ZFX?
> 
> Wouldn't you sell ZFX, and buy back cheaper after the fall in Zinc prices?




So BREND, am I right in my thinking or way off track?


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## chops_a_must

BREND said:
			
		

> Thanks!



MCR (mincor) is the more undervalued of the prospective/ speccie/ jnr prducer nicklers and minara (mre) the most undervalued of the actual producers. Don't hold either but they are definitely my favourites and the ones I would look to buy if I was going to get back into resources.


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## rederob

Gundini said:
			
		

> So BREND, am I right in my thinking or way off track?



Way off track.
Most metal never goes onto LME inventory.
The Chinese can play an arbitrage game; but the margins are not that good at the moment.
I think there is more chance that the metal will never leave Chinese shores.
Cancelled warrants are back up to about 10% of inventory, so the technical weakness of zinc may swing back to strength in coming weeks.
It's certainly the best fundamental position that zinc has been in this year.


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## Halba

Thanks rederob. Notice fridays drawdown and increase of over 3500 tonnes in cancelled warrants. Solid signs.


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## BREND

chops_a_must said:
			
		

> MCR (mincor) is the more undervalued of the prospective/ speccie/ jnr prducer nicklers and minara (mre) the most undervalued of the actual producers. Don't hold either but they are definitely my favourites and the ones I would look to buy if I was going to get back into resources.




Thanks, looks like a good stock to me, and fund managers have been buying in Feb and Mar 07.


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## eMark

London Metal Exchange Warehouse Stocks 
( March 14 ) 
Metal Tonnes in Storage Change from
previous day 
Aluminum 797925 -350  
Copper 197750 -1975  
Nickel 3816 -60  
Lead 31250 +350  
*Zinc 95750 +1625 *

Zinc inventory rises for 3rd day straight. Great timing for ZFX


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## rwkni1

rederob said:
			
		

> Way off track.
> Most metal never goes onto LME inventory.
> The Chinese can play an arbitrage game; but the margins are not that good at the moment.
> I think there is more chance that the metal will never leave Chinese shores.
> Cancelled warrants are back up to about 10% of inventory, so the technical weakness of zinc may swing back to strength in coming weeks.
> It's certainly the best fundamental position that zinc has been in this year.




I agree that most metal never goes onto LME inventory, but i would think that 50kt of idle inventory that is sitting idle in Shanghai will find its way to LME at some point. Cancelled warrants have come back a little bit, but still look pretty volatile. Fundamentally i'm still a bull, simply because i don't think the catch up in supply will be there in 2007. My only real concern is an unforseen supply increase out of China, which is really a bit of a black box in terms of knowing about new mines and expansions. Brend still has me a little worried with that talk of 50kt just waiting to be dumped onto LME.


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## Halba

Looks temporary emark, bear in mind there were about 6 days drawdown in a row to 90k. Seems to be fluctuating between 90k to 100k. Market is overdoing the bashing on zfx/pem one feels exacerbated by recent corrections.

Hold tight. If you believe in the china bull/ rba's comments say it will last decades. So day to day fluctuations will occur. Look at copper, stockpiles went from 100k to 200k but coming back down.


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## eMark

Halba said:
			
		

> Looks temporary emark, bear in mind there were about 6 days drawdown in a row to 90k. Seems to be fluctuating between 90k to 100k. Market is overdoing the bashing on zfx/pem one feels exacerbated by recent corrections.
> 
> Hold tight. If you believe in the china bull/ rba's comments say it will last decades. So day to day fluctuations will occur. Look at copper, stockpiles went from 100k to 200k but coming back down.




I hope Halba...

London Metal Exchange Warehouse Stocks 
( March 15 ) 
Metal Tonnes in Storage Change from
previous day 
Aluminum 798000 +75  
Copper 196125 -1625  
Nickel 3594 -222  
Lead 31075 -175  
*Zinc 96800 +1050*

Although tonight so far Zinc appears to be supported by the decreasing copper inventory.

Zinc March 15,06:00 
Bid/Ask 1.5110 - 1.5201 
Change +0.0544  +3.74% 
Low/High 1.4566 - 1.5223


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## UMike

Up 4.2% now 


Hopefully CBH follows suit


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## Moneybags

UMike said:
			
		

> Up 4.2% now
> 
> 
> Hopefully CBH follows suit




I hope all Zincers follow suit.

MB


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## rwkni1

I'm still a little concerned, inventories up another 1,100 tonnes and up 5.9% for the week. Zinc prices were really just dragged up by copper. Maybe i'm just being paranoid but BREND's comments of 50kt in China waiting to be dumped on LME have shaken my view a little. Interestingly, most of the material appears to be heading into a warehouse in Malaysia, not Singapore.


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## vishalt

rwkni1: it's all bull**** in my opinion, remember a couple of months ago when copper went through the same thing whilst Zinc was shining? 

Metals taking turns to have a correction IMO, copper surged from a low of 2.3 to 2.9 in very little time, Zinc is just settling/consolidating before the next upmove imo.


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## rwkni1

Interesting post from another forum - perhaps an explanation for the rise in inventories in Malaysia:


"In discussion with a few zinc traders about the ins over the last few days, we mostly agree that the explanation is that the net builds of 2050 and 1650 on Tue and Wed, which ended up mostly in Johor, were to satisfy the production targets for Umicore in Malaysia, which is located just near the Port of Johor. The imports also look like they came from India or Korea as opposed to China, as Singapore stocks still fell -950t yesterday. We are of course only speculating without positive confirmation. Nevertheless, we see the build as unique and temporary. To draw your own conclusions perhaps refer to:

http://www.finezincpowders.umicore.com/ProductionUnits/UmicoreMalaysia/

Note the annual production targets are 11,000t. The fine zinc powder that is produced is primarily for anti-corrosion paint markets in Asia and the Middle East.

End note: Refer to Leapfrog's Commodities corner on the website for weekly and monthly zinc updates at:
http://preview5.awardspace.com/leapfrog.co.nr/commoditiescorner.html"


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## Halba

Hullo all

Zinc appears to be in a seasonal slump. Except its seasonal slump is not as bad as coppers- copper stockpiles were jumping 2500-5000t per day from 100kt to 212kt and now back again. Zinc's addtions about 1000 tonnes per day, and usually have some drawdowns in there. 

Clearly using copper example we can see same thing will happen to zinc. Copper slump lasted about 6 months. Zinc's slump(now occuring after copper slump) has occured for exactly 3 months

We are in a metal bull people. As evidence look at the performance of all metals in the past few weeks and even Zinc from 100kt to 90kt at one point

Lead is tight, China using heaps

Nickel is tight as hens teeth

cobalt doesn't appear available

Uranium 'yellow metal' now $91/lb

Copper now it is tight - china building olympics, other projects

Zinc - ?? Hang in there. 

Aluminium - different market to the other metals, available.


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## rwkni1

I thoroghly concur that the metal bull market has a way to go, but just a little concerned with zinc production out of china, as it is a bit of a black box. China has traditionally been a swing producer of zinc, and have been able to dampen prices in the past by exporting at will. While its easy to see what projects are coming on line that are being developed by western and exchange listed companies, predicting much of china's zinc production is a bit of a black art. There is the chance that expansions over the past couple of years at operating chinese zinc mines are kicking in. I'm still a bull on zinc and doubt that chinese supply will exceed demand over the next ten months, but comments like those of BREND suggesting there are significant stocks sitting in shanghai and waiting to be exported do make me a little nervous, because chinese supply is the only thing that i could forsee bringing an end to the zinc bull market.


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## Halba

Talking about the end of the zinc bull already?! Demand will last decades. Sure china will have to buy in sometime.


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## Halba

Zinc stockpiles up 6700 tonnes. I have never seen such a big increase in my life. Really testing my patience this zinc market.

I guess brend was right- 50,000 tonnes are being dumped on the LME. Todays increase is the biggest I've seen in years and does not bode well for this market in the next 1-3 months.


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## eMark

Halba said:
			
		

> Zinc stockpiles up 6700 tonnes. I have never seen such a big increase in my life.




Well that's well & truly taken the wind out my sails. I guess it's bye bye to breaking even with my ZFX buy price for the short term.

London Metal Exchange Warehouse Stocks 
( March 16 ) 
Metal Tonnes in Storage Change from
previous day 
Aluminum 797725 -275  
Copper 194400 -1725  
Nickel 3564 -30  
Lead 30950 -125  
*Zinc 103525 +6725*


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## Halba

Don't get worried. Copper did the same thing for a while. ATM, zinc not down much, traders think its similar to the copper phenomena. Copper is now in deficit again.


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## rederob

Halba said:
			
		

> Zinc stockpiles up 6700 tonnes. I have never seen such a big increase in my life. Really testing my patience this zinc market.
> 
> I guess brend was right- 50,000 tonnes are being dumped on the LME. Todays increase is the biggest I've seen in years and does not bode well for this market in the next 1-3 months.



Halba
You either are very young, or have not followed metals for any length of time.
Drag up the 5year zinc chart and you will see a single warranting over ten times greater than yesterday's.
I agree that zinc is not in the diabolicals that saw copper trashed last year, although zinx is also not the "industrial" metal, and is open to greater manipulation as a result.
I suggest investors tread warily for now.


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## BREND

Early in the week, I had recommended clients to sell zinc call options, strike $3000, Apr 07, premium was USD34/ton then. This translates to a monthly yield of 8.9% a month. 

In the worst senario, call options get exercise, investor will have a long position at $3000, which is not a bad level to go long on futures. 

I guess this is the way to play zinc now.


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## Halba

hi brend

i agree support at $3000 a tonne seems very strong even with stockpile increases. One would thing this is due to maintaining the differential with copper which is strong.


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## BREND

Zn inventory up 5050mt today. I had cut loss on ZFX.


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## misterS

Brend - do you think these increases in LME zinc stock are related to your post earlier in March? -

 "There is 50,000mt of zinc parked in Shanghai warehouse. Possibly waiting for LME price to rise, then export to LME."

Is it your sense of where the zinc stock level is heading that saw you out of zfx when the ex-div date 5 April is not far off? Does this mean you anticipate the sp will not be higher on 4 April than today - or is more that you see it as likely to be a marginal sp difference and you see a better opportunity for your money elsewhere than to take the div - (or the immediate pre-div sp) ? 
thanks


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## vishalt

yea yikes at the inventory spike there D:


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## Halba

> re: BREND Re: ZINC - The Metal for 2007
> 
> --------------------------------------------------------------------------------
> 
> Zn inventory up 5050mt today. I had cut loss on ZFX.




Hi brend. i also sold some of my ZFX and all of my pem earlier this week. However the DOW is up over 150 points, so i doubt much weakness in the equities like ZFX as its a top 50.


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## catihouse

misterS said:
			
		

> Brend - do you think these increases in LME zinc stock are related to your post earlier in March? -
> 
> "There is 50,000mt of zinc parked in Shanghai warehouse. Possibly waiting for LME price to rise, then export to LME."
> 
> Is it your sense of where the zinc stock level is heading that saw you out of zfx when the ex-div date 5 April is not far off? Does this mean you anticipate the sp will not be higher on 4 April than today - or is more that you see it as likely to be a marginal sp difference and you see a better opportunity for your money elsewhere than to take the div - (or the immediate pre-div sp) ?
> thanks





MisterS
I'll think you will find that the ZFX ex div date is 30 March, not 5 April.


----------



## coyotte

If ZFX dos'nt go with the XJO today --- if LONG I'd be asking WHY ?

Nice Head & Shoulders pattern forming in Zn ?


cheers


----------



## BREND

I had also get out of my nickel play, took some profits on CVRD. 
Nickel inventory up 654mt yesterday, rather unusual.


----------



## Halba

Hi Brend.  Below is the article regarding zinc supply increases



> LME FOCUS - Zinc price under pressure, as visible inventory builds up
> 
> BaseMetals.com
> 
> Zinc prices fell to their lowest for just over a month on the LME on Wednesday, due to warehouse inventories rising to their highest since late-October last year, and further stock increases are expected.
> 
> Warehouse stocks leapt 5,050 tonnes, or five percent, to 106,800 tonnes, to their highest since October 31 last year. Today's increase reflected an unusual shipment into Dubai, but further stock rises are expected in general, as off-warrant stockpiles are registered.
> 
> However, the stock build-up is somewhat illusory, as much of the recently-warranted metal is 'window-dressing' and not easily available.
> 
> "It has been put there for show only," an LME floor trader said.
> 
> Since the start of this month, LME zinc stocks have risen 13,275 tonnes, or 14.2 percent. A long-running inventory downtrend bottomed out in December 2006, when stocks fell to 84,825 tonnes, the lowest since 1991.
> 
> Traders said the warranting over the last week is part of a 15,000 increase. This is metal which has been off-warrant for some time.
> 
> "However, it is highly unlikely that this material will show up in the clearing as it almost certainly forms part of a 'term financing swap'," another trader said.
> 
> An international merchant is said to be 'parking' metal in some regions which are less easy to remove metal from -- Singapore and Johor, as well as Dubai. This shows up in reported stocks and depresses prices on the LME. Prices fell three percent on Wednesday to $3,120 a tonne, down $100 from Tuesday.
> 
> The inventory operation may also be designed to influence ongoing annual TC/RC (treatment charges/refining costs) negotiations between producers and smelters.
> 
> No benchmark has been set as yet, but a level of $300 a tonne is being favoured.


----------



## BREND

Halba said:
			
		

> Hi Brend.  Below is the article regarding zinc supply increases




Thanks Halba, but I don't believe. 

I only look at real facts, statistics, not opinions. 

According to report from Beijing Customs, it is a fact, that exports of zinc out of China has been strong, and it is still rising every month.


----------



## vishalt

Zinc steadily declining but the only reason ZFX is holding at its current level is because of the upcoming dividend. 

Wish it'd fall to 15/14.50 so I can buy more :/


----------



## misterS

catihouse - yeah sorry mixed up ex div 30/3 with record date 5/4


----------



## BREND

Zinc inventory is up 4250mt today. This is crazy, China merchants simply dump all the excess zinc into LME.


----------



## Moneybags

vishalt said:
			
		

> Zinc steadily declining but the only reason ZFX is holding at its current level is because of the upcoming dividend.
> 
> Wish it'd fall to 15/14.50 so I can buy more :/




You may get your wish Vishalt, as soon as the record date has been reached. I reckon there will be heaps dumped straight after especially if LME stocks keep building. I'm getting out of Zinc for now........just doesn't look good.

MB


----------



## nomore4s

Moneybags said:
			
		

> You may get your wish Vishalt, as soon as the record date has been reached. I reckon there will be heaps dumped straight after especially if LME stocks keep building. I'm getting out of Zinc for now........just doesn't look good.
> 
> MB




I agree MB, was looking to buy ZFX at around $16 for the D/E but the chart is looking weak and with zinc not looking so good ZFX could really struggle after D/E date so I'm not willing to take the chance.


----------



## vishalt

I suppose that's a shrieking possibility lads, might not build on my current share base of ZFX till after it drops, I still believe the fundamentals are there - just volatile in the short term.


----------



## Moneybags

vishalt said:
			
		

> I suppose that's a shrieking possibility lads, might not build on my current share base of ZFX till after it drops, I still believe the fundamentals are there - just volatile in the short term.




Vishalt,

If you have a look at other Zincers charts PEM,CBH,KZL,INL, they have peaked around Dec and are now heading down due to POZ. JML is looking great but an exception and TZN has just reversed but for how long. ZFX is bearish but has held up not too bad and it is my opinion that low PE and dividend coming that have helped in that regard.

Not long until we'll know anyway.

MB


----------



## Freeballinginawetsuit

vishalt said:
			
		

> I suppose that's a shrieking possibility lads, might not build on my current share base of ZFX till after it drops, I still believe the fundamentals are there - just volatile in the short term.




Volitility?, doubt that!

Speculation is almost gone in the Zincers and even the total exit would only see further marginal falls.

Zinc dynamics are still thier............just not as artificially inflated ATM .


----------



## vishalt

Thanks for the comments. 

Ta for the small-cap Zinc list there Moneybags, i'm looking into them! Do you hold any of them?

Cheers again!


----------



## Moneybags

vishalt said:
			
		

> Thanks for the comments.
> 
> Ta for the small-cap Zinc list there Moneybags, i'm looking into them! Do you hold any of them?
> 
> Cheers again!




Vishalt,

I sold the bulk of my INL yesterday, still have a small parcel.

I am holding KZL but minor amount.

I watch all the Zincers out of interest but my favs are BSM & JML........both have plenty of upside ( my opinion only )

MB


----------



## rwkni1

Noticed there was a 10,000 tonne increase in cancelled warrants on Monday which was encouraging. Effectively doubled cancelled warrants from 8kt to 18kt - currently just over 16kt. Very difficult to pick a trend in this zinc market.


----------



## Col Lector

Citigroup has its eyes on Zinifex apparently......price may be being supported by someone accumulating as we speak; or maybe they are waiting for the ex-div bailout to pounce!
This extract from article in The Australian 


Big is better as resources hit-list embraces BHP, Rio
Andrew Trounson 
March 27, 2007 


RESOURCE companies dominate a list of potential takeover targets compiled by broker Citigroup, with even the venerable behemoths BHP Billiton and Rio Tinto having the indignity of being targets.
With private equity consortiums globally pursuing mammoth, largely debt-funded takeovers, Citigroup has picked out companies with plentiful pre-tax earnings which can service an acquirer's interest payments for an entirely debt-funded bid. 
BHP and Rio are generating so much cash that, on an 8 per cent cost of debt, raiders could pay premiums of 90 per cent-plus for the global giants that are already capitalised at $163 billion and $103 billion, respectively. 

But zinc major Zinifex is the most attractive of the big resources plays, with sufficient cash generation to support a takeover at a 300 per cent premium.........


----------



## BREND

Experts are always saying that zinc price will rise because supply of zinc at LME is already so low. I do not buy that story, China is a huge exporter of zinc, if China does not need the zinc, why should I be optimistics about this metal.

The chart is still showing a downtrend for zinc. 

Had advised clients to short zinc, margin required for 1 lot is USD9,500

http://basemetal-trading.blogspot.com/2007/03/short-1-lot-of-zinc.html


----------



## Halba

Hi brend. Zinc looks like it is in a slump both technically and fundamentally. One thinks that if China required zinc it would have gone up by now. But it hasn't.


----------



## michael_selway

Col Lector said:


> Citigroup has its eyes on Zinifex apparently......price may be being supported by someone accumulating as we speak; or maybe they are waiting for the ex-div bailout to pounce!
> This extract from article in The Australian
> 
> 
> Big is better as resources hit-list embraces BHP, Rio
> Andrew Trounson
> March 27, 2007
> 
> 
> RESOURCE companies dominate a list of potential takeover targets compiled by broker Citigroup, with even the venerable behemoths BHP Billiton and Rio Tinto having the indignity of being targets.
> With private equity consortiums globally pursuing mammoth, largely debt-funded takeovers, Citigroup has picked out companies with plentiful pre-tax earnings which can service an acquirer's interest payments for an entirely debt-funded bid.
> BHP and Rio are generating so much cash that, on an 8 per cent cost of debt, raiders could pay premiums of 90 per cent-plus for the global giants that are already capitalised at $163 billion and $103 billion, respectively.
> 
> But zinc major Zinifex is the most attractive of the big resources plays, with sufficient cash generation to support a takeover at a 300 per cent premium.........




Dropped to 90000 on warrant though!

http://www.basemetals.com/stocks.aspx

thx

MS


----------



## rwkni1

Halba said:


> Hi brend. Zinc looks like it is in a slump both technically and fundamentally. One thinks that if China required zinc it would have gone up by now. But it hasn't.




I don't think its a story of whether or not china 'requires' zinc - they're still easily the largest consumer of the metal in the world and growing. I think the question is how much old high-cost (or new for that matter) chinese capacity has come on line over the past 12 months as a result of the higher-prices, and what impact will this have on the global supply-demand balance.


----------



## BREND

Zinc price is down USD70 now.


----------



## vishalt

Zinc just broke past resistance @ 1.50.


----------



## BREND

vishalt said:


> Zinc just broke past resistance @ 1.50.




You are right, looks like zinc is turning from downtrend to uptrend. Let's see if this turn is successful.


----------



## misterS

ABARE March quarterly commodities report says zinc in deficit again this year, with further global drawdown but in balance by 2008, so a bit more upward zinc price over the next few months seems reasonable.  

"Actual use" demand has to manifest - can't wait forever if you need zinc - and reveal real deficit or not, as the year progresses.


----------



## vishalt

Zinc up almost 8%, anyone want fries with that??


----------



## UMike

vishalt said:


> Zinc just broke past resistance @ 1.50.



And just touched $1.60.

Go CBH FFS.


----------



## dubiousinfo

Zinc stockpiles are still rising and have risen the last 2 days in a row, but zinc prices are up overnight.  Looks like rising prices in other metals are dragging zinc up with them.


----------



## rederob

dubiousinfo said:


> Zinc stockpiles are still rising and have risen the last 2 days in a row, but zinc prices are up overnight.  Looks like rising prices in other metals are dragging zinc up with them.



Cancellations remain robust at about 15% of inventory, so drawdowns will keep the headline figure in check.


----------



## dubiousinfo

rederob,

Given that the forecasts are for zinc to be in deficit again this year, when do you think we might see the stockpiles start to decline again ? Do you think we will have to wait until after the european summer which starts in about 2 to 3 months ?


----------



## UMike

LME Zinc upto $1.6 

Go CBH Go


----------



## Col Lector

Regarding the turning of the zinc market ....
Although it is widely agreed that the supply response is coming (and soon), could this be more than offset by demand growth that has been overlooked?? (including by the IMF?)
1. High nickel prices will encourage the the move to using galvanised steels rather than stainless steel where possible 
2. The continued growth in iron-ore and steel demand, particularly asian construction and vehicle markets. 
3.The huge desire by Indians and Chinese (half-the worlds pop) for vehicle ownership (and plane travel) is a new phenomenon that is difficult to accurately forecast.
4. The impact of the new environmental-based laws in China to rein in the proliferation of small-mining operations could cause Chinese supply-growth to hiccup in short to medium more than anticipated. 
5.Opening up trading of Zn-futures may well distribute the metal better within China. This could lead to a higher level of zinc usage and also  initiate new-enterprise use of the metal.....ie, the Chinese love to make products to sell offshore and if it is very available it may be chosen for the "convenience factor" 
This hypothesis is supported by China's very recent move to abolish export rebates ie, they see that the country will require all its zinc production...and maybe some significant imports as well

Thoughts??


----------



## rederob

Col
The "supply" response might not eventuate.
It really has not shown itself, apart from arbitrage metal dumping.


----------



## Magdoran

Disclaimer:  This is posted purely for interest in technical analysis techniques, and should not be used as a basis to make financial decisions.


The previous forecast for Zinc was invalidated when a strong drive occurred towards the end of the cycle (15 April target).  The recent price action finding SUPPORT at a HIGHER LOW near the 15th April may well be very bullish, and suggest a very short sharp bullish drive. (Yup, I got the long term forecast WRONG – looked good following the pattern for quite a while till it decided to rally UP, and not capitulate DOWN).

This kind of premature termination in the price action with cycles has happened before.  I have been studying these in many markets and different eras for quite a while now, and have built a range of caveats for determining trading probabilities.  This pattern indicates a fast move UP, usually into a key time increment and price level.  In the chart below I have projected key times and prices using a standard method.

My primary thinking in probability here is a strong drive UP into the price increments I have listed on the right hand side of the chart into 21 May in a blow off kind of move.  The key is for multiple higher lows, and the lows around the 15th April should not be broken (although it is possible for this to happen in an exhaustive pattern down, then a strong bullish move to eventuate, but less likely – depends on the pattern).

Typically with this kind of (McLaren) “Jamming up” move after a strong bearish counter trend to the bullish drive in the weekly chart results in a fast exhaustive bullish move up of some kind, and then a retest of the lows once a high is made usually below the major high (my primary suspicion is a retest to find support on the 20 July).  

The idea is this may be a response to the struggling bearish move down which failed to obtain a capitulation style bearish exhaustion, which may yield a sudden sharp optimistic bullish move which quickly exhausts (suspect 21 May, or less likely 02 June +/- 1 trading day), retests the lows, then bases in order to resume the secular bullish drive.

This assumes the secular commodity bull will be long enough and strong enough in Zinc to sustain a retest of the high, and a subsequent bullish drive above these highs.

However I have been pioneering a multi-harmonic cycle method that I do see in evidence here, but won’t at this point muddy the water by complicating what I’m seeing (I may post another version of the chart with the harmonic time/price points for interest, but would prefer to keep this post as simple as possible).

In sum, provided the higher low holds, I can see the highest probability scenario currently of Zinc driving strongly into one of the price increments listed around 21 May.  Depending on how it trades into this time point will tell a lot about how Zinc may move post this time – either a retest of the lows to find support around 20 July, or a bullish continuation into a new major high of some sort.



Regards


Magdoran


(Please note:  All time points are typically +/- 1 trading day, but can be as much as 2 trading days from the time point in price action, and +/- 4 calendar days for cycle completions is not unusual).


----------



## wavepicker

Magdoran said:


> Disclaimer:  This is posted purely for interest in technical analysis techniques, and should not be used as a basis to make financial decisions.
> 
> 
> The previous forecast for Zinc was invalidated when a strong drive occurred towards the end of the cycle (15 April target).  The recent price action finding SUPPORT at a HIGHER LOW near the 15th April may well be very bullish, and suggest a very short sharp bullish drive. (Yup, I got the long term forecast WRONG – looked good following the pattern for quite a while till it decided to rally UP, and not capitulate DOWN).
> 
> This kind of premature termination in the price action with cycles has happened before.  I have been studying these in many markets and different eras for quite a while now, and have built a range of caveats for determining trading probabilities.  This pattern indicates a fast move UP, usually into a key time increment and price level.  In the chart below I have projected key times and prices using a standard method.
> 
> My primary thinking in probability here is a strong drive UP into the price increments I have listed on the right hand side of the chart into 21 May in a blow off kind of move.  The key is for multiple higher lows, and the lows around the 15th April should not be broken (although it is possible for this to happen in an exhaustive pattern down, then a strong bullish move to eventuate, but less likely – depends on the pattern).
> 
> Typically with this kind of (McLaren) “Jamming up” move after a strong bearish counter trend to the bullish drive in the weekly chart results in a fast exhaustive bullish move up of some kind, and then a retest of the lows once a high is made usually below the major high (my primary suspicion is a retest to find support on the 20 July).
> 
> The idea is this may be a response to the struggling bearish move down which failed to obtain a capitulation style bearish exhaustion, which may yield a sudden sharp optimistic bullish move which quickly exhausts (suspect 21 May, or less likely 02 June +/- 1 trading day), retests the lows, then bases in order to resume the secular bullish drive.
> 
> This assumes the secular commodity bull will be long enough and strong enough in Zinc to sustain a retest of the high, and a subsequent bullish drive above these highs.
> 
> However I have been pioneering a multi-harmonic cycle method that I do see in evidence here, but won’t at this point muddy the water by complicating what I’m seeing (I may post another version of the chart with the harmonic time/price points for interest, but would prefer to keep this post as simple as possible).
> 
> In sum, provided the higher low holds, I can see the highest probability scenario currently of Zinc driving strongly into one of the price increments listed around 21 May.  Depending on how it trades into this time point will tell a lot about how Zinc may move post this time – either a retest of the lows to find support around 20 July, or a bullish continuation into a new major high of some sort.
> 
> 
> 
> Regards
> 
> 
> Magdoran
> 
> 
> (Please note:  All time points are typically +/- 1 trading day, but can be as much as 2 trading days from the time point in price action, and +/- 4 calendar days for cycle completions is not unusual).




The forecast back in late December was for Zinc to undergo its largest correction since it bull began. This was at when Zinc was trading at 4500. Most fundamentalists were calling for a climb to 5500 back then. We said back then that Zinc would “see 3000-3500 before it would see 5500’.

This forecast/trade went as expected. Now is it time to put the bull hat back on?? Perhaps for the short term. The move down from the peak still counts best as an impulse until that scenario is invalidated. ATM it has not, and the current rally since the Feb low still does not have the hallmarks of an impulse yet.  This may well be a countertrend(wave C of a countertrend)  Wave C’s can be quite strong. Will be very interesting to see how these stack up to the probability of wave C resolution??

Cheers


----------



## Magdoran

wavepicker said:


> The forecast back in late December was for Zinc to undergo its largest correction since it bull began. This was at when Zinc was trading at 4500. Most fundamentalists were calling for a climb to 5500 back then. We said back then that Zinc would “see 3000-3500 before it would see 5500’.
> 
> This forecast/trade went as expected. Now is it time to put the bull hat back on?? Perhaps for the short term. The move down from the peak still counts best as an impulse until that scenario is invalidated. ATM it has not, and the current rally since the Feb low still does not have the hallmarks of an impulse yet.  This may well be a countertrend(wave C of a countertrend)  Wave C’s can be quite strong. Will be very interesting to see how these stack up to the probability of wave C resolution??
> 
> Cheers



I have to defer to wavepicker’s Elliott judgement here that this may well be a “C” wave up, but it would also make sense to me alternatively to see a drive up being a 3rd wave, pulling back to make a choppy wave 4, then a drive up (maybe into 6th September or 24 Oct which may be significant depending on how the pattern unfolds).

So it may be that Nick’s call was right for the drive up out of the low…  Either way, I think the consensus would be bullish currently, is that correct?

Have a look at the chart attached which gives a broader context of time and price points with the harmonics included… should be interesting to watch given this is still an experimental theory I’m working on.

Regards


Magdoran

P.S. Apologies for the quality of the chart, the size limit even pipped my standard greatly resized version which usually makes it though… hence only just made it with the heaviest reduction I could set.


----------



## vishalt

those zinc stockpiles are getting crushed


----------



## BREND

Long zinc futures again:
http://basemetal-trading.blogspot.com/2007/04/review-on-zinc-trade_30.html


----------



## BREND

Zinc is higher now. I had recommended clients to buy when it was at 3600 level. Yippie!

http://basemetal-trading.blogspot.com/2007/05/review-on-zinc-trade.html


----------



## Magdoran

Latest Zinc chart.


----------



## Nick Radge

Mag, Wavepicker,
Long time since I posted here. This is my current count - the same one I've been working with for some time. We've retraced into the 50.0% - 61.8% of the 5-waves down to -A or -1. The current move off the wave-b lows has extended 261.8x wave-i. Some low closes over the last week. My opinion is that any move now back below 3400 will see the completion of wave-2 or -B and that new lows may be around the corner. 

If we do not see that break below 3400 we may now be still extending in some disjointed wave-iii of -c.

Regards


----------



## BREND

Zinc is now trading at $3870/ $3875. Since it has broken its short term resistance, should be trading higher this few days.

http://basemetal-trading.blogspot.com/2007/05/review-on-zinc-trade_02.html


----------



## Lucky_Country

AAR sounding like a good zinc play but early stages


----------



## BREND

Zinc is higher today at $3912/$3915

http://basemetal-trading.blogspot.com/2007/05/review-on-zinc-trade_03.html


----------



## drmb

I don't go in for much chart analysis, but just looking at the 60 day poz (from kitcometals) since 2 April 07 it looks like higher highs, and higher lows, which seems to be a good sign for my zincies.


----------



## rederob

wavepicker said:


> The forecast back in late December was for Zinc to undergo its largest correction since it bull began. This was at when Zinc was trading at 4500. Most fundamentalists were calling for a climb to 5500 back then. We said back then that Zinc would “see 3000-3500 before it would see 5500’.
> Cheers



Zinc's "big picture" has not changed in the past few years - it remains bullish, and is getting tighter.
The correctly forecast correction was exacerbated by an arbitrage opportunity in China that ran for a quarter and has now abated.
Zinc inventories are extremely tight and it will be instructive to watch the new Shanghai zinc exchange or possible clues about east-west metal flows.
With the best analysts in the metals sectors continually under-estimating base metals demand in recent years, it will not surprise if they end up getting zinc's "balance" in 2007 wrong.
So far zinc analysis has skewed in favour of oversupply due to Chinese destocking in 2007.  It has been supported by various industry sector slumps in the US which led to very little drawdown at New Orleans (which contains about half the available zinc that's warehoused).
New Orleans has recently perked up with cancellations increasing there as well as at Singapore -which has over a third of inventory cancelled.
A near term continuation of present inventory flows will see zinc surpass its 2006 prices, and probably lead to funds re-establishing themselves as key price drivers of this metal.


----------



## Damuzzdu

BREND said:


> Zinc is higher today at $3912/$3915
> 
> http://basemetal-trading.blogspot.com/2007/05/review-on-zinc-trade_03.html





Zinc rallies in late LME trading, along with Copper.

Closes up 4.1% at $US4030/tonne.

Once zinc has pushed thru $US3700 barrier, I was thinking a push towards $US4000 would occur over in the next two weeks or so, but boy that was quick.

A run to US$4150 now might be possible.

Cheers


----------



## hangseng

Lucky_Country said:


> AAR sounding like a good zinc play but early stages




Lucky_Country I agree entirely. 

AAR has gone completely under the markets radar. With a JORC Indicated reserve now delineated over 7-7.7% Zn the in ground value is over $US1b and now progressing to advanced DFS stage for mining and testwork. Add to that the Cu, Pb and Ag and you have one hell of a base metals company with a low market cap and cash rich producing gold mine to go with it. I am now watching the latest base metals addition being Victoria Downs in the NT.

It is simply a matter of time before the market awakens to AAR value.


----------



## BREND

Damuzzdu said:


> Zinc rallies in late LME trading, along with Copper.
> 
> Closes up 4.1% at $US4030/tonne.
> 
> Once zinc has pushed thru $US3700 barrier, I was thinking a push towards $US4000 would occur over in the next two weeks or so, but boy that was quick.
> 
> A run to US$4150 now might be possible.
> 
> Cheers




My next target is $4200. 
http://basemetal-trading.blogspot.com/2007/05/zn-trade.html


----------



## hangseng

hangseng said:


> Lucky_Country I agree entirely.
> 
> AAR has gone completely under the markets radar. With a JORC Indicated reserve now delineated over 7-7.7% Zn the in ground value is over $US1b and now progressing to advanced DFS stage for mining and testwork. Add to that the Cu, Pb and Ag and you have one hell of a base metals company with a low market cap and cash rich producing gold mine to go with it. I am now watching the latest base metals addition being Victoria Downs in the NT.
> 
> It is simply a matter of time before the market awakens to AAR value.




Well the market woke up today. 

Over 10,000,000 traded with 6m of it in the last 10 minutes or so. Sp from 5.7 - 6.4 at close at buyers accumulating. Most sales off screen today with very large single trades going through.

With advanced study stage in progress is this the next Zinc producer?


----------



## Magdoran

Latest Zinc Chart


----------



## Freeballinginawetsuit

Magdoran said:


> Latest Zinc Chart





How does your current chart on Zinc validate in retrospect youre musings on the one posted on the 27/02.

I know nothing of EW so would be keen to see if it all panned out the way you thought it would.

I have however accumalated Zinc related producers over the last few months on the simple assumption that the downtrend was cyclical/ exit of speculation form the mean during this period. For me the dynamics driving Zinc relative to demand....... remained reasonably predictable from a forward view.

Surely those that speculated on such a scenario and due to the cyclical nature of such speculation........................the cycle repeats again.


----------



## BREND

Funds are buying copper and zinc tonight. 
http://basemetal-trading.blogspot.com/2007/05/review-on-zinc-trade_04.html


----------



## Damuzzdu

BREND said:


> Funds are buying copper and zinc tonight.
> http://basemetal-trading.blogspot.com/2007/05/review-on-zinc-trade_04.html





Zinc up to $US4140/tonne up 2.99% 
Copper up $US8290/tonne up 1.47%

Boy these metals are really in rally mode now.

Cheers
muzz


----------



## Magdoran

Freeballinginawetsuit said:


> How does your current chart on Zinc validate in retrospect youre musings on the one posted on the 27/02.
> 
> I know nothing of EW so would be keen to see if it all panned out the way you thought it would.
> 
> I have however accumalated Zinc related producers over the last few months on the simple assumption that the downtrend was cyclical/ exit of speculation form the mean during this period. For me the dynamics driving Zinc relative to demand....... remained reasonably predictable from a forward view.
> 
> Surely those that speculated on such a scenario and due to the cyclical nature of such speculation........................the cycle repeats again.



Based on post 110 of this thread, the analysis in conjunction with the cycles work I’d done on ZFX, the day to go long ZFX for a stock trader was the 20/04/07, and the 23/02/07 was the time to go long for May options (if OTM based on volatility and theta decay – there was so far around a 700% gain to be made with $17 May calls – 0.12 to over 0.80).  Hence the cycle was spot on.

Firstly for every one else, please understand that this is an ongoing one way mudslinging match initiated and perpetuated by Freeball, who pushed his insulting “each way bet” line (accusing all my analysis of fence sitting without understanding the concept of forecasting with inbuilt failure criteria), and forced the adoption of making long range forecasts without the failure criteria incorporated.  

Zinc interestingly enough actually followed the forecast quite faithfully for weeks before the price action rallied.  See Post 1473 05 March 2007 in the ZFX thread – Look at the chart posted there and the actual path of Zinc from this point.  The pattern for a long time was very close to the forecast but the creeping trend which was correctly drawn on the chart resolved UP not DOWN.  This is quite normal for markets to do this, and didn’t invalidate the time cycle at all.

The style of technical analysis I follow is primarily time cycle based, and relies on adjustments based on how the pattern unfolds.  Hence some long term forecasts can be spot on the whole way, while others have criteria which trigger adjustments.  Zinc in this case invalidated the bearish capitulation possibility late in the forecast, and the pattern demonstrated a bullish scenario as being the highest probability from the pattern as it unfolded.  I posted this in post 110 on this thread.

For those people who understand McLaren’s concept of the “type of trend” will recognise the significance of the pattern here.  The 15 of April was a key date in the cycle, which was my main focus.  Time not price.  The fact that Zinc rallied up and pulled back into this date told us a lot about what is going on.  Hence as the pattern unfolds, adjustments need to be made.

The 15th of April was a key date as was forecast, and was the termination of the bearish cycle.  The fact it was a higher low is very common in commodities, and is often a signal of the commencement of a very sharp bullish drive for a limited period.  The price action so far has borne this out. I think the cycle is still working, and major cycle lows can actually end up being higher lows in price and pattern.  Hence I have forecast in time where I think Zinc may move to in a blow off style move.  The key April 15th cycle completion date was at an important juncture (the key higher low), so the cycle is still valid, which is the main thrust of my style.

I have never claimed to have a crystal ball, and never claimed 100% accuracy, hence the use of failure criteria are required to reappraise forecasts as events unfold.  How many people can trace out the exact pattern of a stock or commodity or index, complete with exact prices and times, and get it 100% right 100% of the time?  If I am to be criticized for making many forecasts on the ASF and not being able to do this perfectly 100% of the time in all respects, please, someone show me how this is done (how about you Freeball?).

In fact, I don’t remember Freeball accurately projecting when the bearish move in Zinc would end, or how long this rally will last on this thread, does anyone else?  Where is his projection with exact dates and price levels?  Where?  It’s really easy to sit on the sidelines and take no risks and say nothing, then pop out when a complex forecast is made and doesn’t work precisely.  Most of the time Zinc followed the projection like clockwork.  It’s still hitting the dates which is the primary element in my style.  Where is Freeball’s projections?



Freeball:
Now, Freeball,  in answer to your comment, have a look at post 110 on this thread; it says it all - If you’d bothered to read it.

You only have one objective here Freeball, to beat your chest about how good you are and the need to put others down to feel good about yourself. You don’t have much of a generosity of spirit, do you?

You also have no interest in the work I am doing, and haven’t bothered to even look at any of my detailed posts on the subject of technical analysis.  If you actually had any genuine interest you would understand what I’m doing and why. All you have is insults and one upmanship with no substance behind it.

You repeatedly fail to grasp simple concepts like probabilities, and the need to incorporate failure criteria into technical analysis.  You haven’t understood that this style is based on TIME, NOT PRICE.  It is designed to locate high probability swing trades.  That is exactly what post 110 does, doesn’t it?

I’d love to see you post exact time and price points and the expected path as I did in my posts with an accuracy to match the majority of my calls on ASF.  Let’s see you step up to the challenge now and make your forecast well ahead of time, with time points and price points, and the exact path that Zinc will take just like I did.  Don’t just attack and criticise, step up to the plate and show me how good you are.

If you don’t have the courage of your convictions to take up the challenge you’ve created, you aren’t worth any further trouble Freeball, and you’ll have shown yourself to be a hollow man with no substance.

I look forward to seeing your precise forecast in due course.

Magdoran


----------



## BREND

Why don't just buy zinc futures to get exposure to zinc rally? 
Zinc goes up, zinc producer may not go up.


----------



## Magdoran

BREND said:


> Why don't just buy zinc futures to get exposure to zinc rally?
> Zinc goes up, zinc producer may not go up.



I agree fully... better to trade the underlying, but the comment was directed to our little friend who trades stocks not commodities...


----------



## Freeballinginawetsuit

Magdoran said:


> TIME, NOT PRICE. It is designed to locate high probability swing trades.
> Magdoran





Hi Mag,

I do have an interest in EW (especially the time component) and follow Kauri's posts. Although a noob on EW specifics it seems to correlate to my entries/exits on trades.

Agreed that I don't trade the commodity and rather just the equities and have for some time.

Like anyone, I get my calls wrong on occasions  and in the case of Zinc started accumalting the equities this time around 10 odd percent off the bottom. They overshot value IMO but speculation past the mean on upward/downward momentum is common.

No need for me to post my last lot of Zinc trades, theyve been and gone and I took profits short (still have some longs though), dividends and all  .

I did however take final large positions only days before Zinc equities trended in recent weeks. Even suggested at the time to a fellow poster on ASF over some beers that IMO Zincers would push in a matter of days.

I admire youre time and effort you put into youre postings Mag, youre obviously knowledgable/dedicated to EW. 

Personally I find the constant chest beating to your EW chums/March's effort and condecending banter silly. 

IMO its all about getting returns out of the market and protecting youre capital.............simple. How its done is up to the individual and thier are many methods, some times the simple ones are often the most effective.

Cheers

And by the way I clearly posted my views on the top of the last Zinc cycle in the stocks I trade and the reasons for my exit (and entries), whilst most were spouting blue sky. As with my initial  entry at the subsequent downtrend, albiet a bit early.
Like the liquidity/speculation near term that has traded Zinc equities, its all about the underlying mean fundamentals. The charts indicate this after the fact and once positions are taken.


----------



## Lucky_Country

Zinc up 3.4% on Friday really looking bullish at the momment


----------



## rederob

BREND said:


> My next target is $4200.
> http://basemetal-trading.blogspot.com/2007/05/zn-trade.html



That's not a target.
This is a target:
$5000


----------



## michael_selway

rederob said:


> That's not a target.
> This is a target:
> $5000




Hi Red you were right about Nickel

do you think $10000 for Zinc might be achievable?

thx

MS


----------



## rederob

michael_selway said:


> Hi Red you were right about Nickel
> 
> do you think $10000 for Zinc might be achievable?
> 
> thx
> 
> MS



Not in the medium term!
We will need a few major zinc projects to run off course.
The prognosis now is for market tightening to continue.
The next 12 months suggests balance to slight supply surplus.
Now I'm not suggesting the people that know more will get it right - they just know more!
Let's see if zinc can parallel copper for the time being: Noting that copper has yet to fathom $10k.
I reckon a 3 year $10k target is possible for zinc on an overly optimistic basis: Not one I am yet willing to put my name on tho!


----------



## UMike

michael_selway said:


> Hi Red you were right about Nickel
> 
> do you think $10000 for Zinc might be achievable?
> 
> thx
> 
> MS



LOL I'd like to see it get to $5,000 first.


----------



## Lucky_Country

Can Zinc supply keep up with demand ?
AAR and Zinc could do us all very nicely thats my tip


----------



## UMike

Well LME stocks fell again.

Zinc  	86875  	-4800


----------



## Magdoran

UMike said:


> Well LME stocks fell again.
> 
> Zinc  	86875  	-4800



That’s odd, I make it down 30 points to 4100.

Assuming my information is correct, this is a normal counter trend to a strong bullish drive, and you would expect a pull back around this time and price point.


----------



## Magdoran

The LME movement in Zinc is 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).


----------



## Magdoran

Awwww, Frig, Zinc’s taking a bath – down over 4% - Really got the turning point wrong.  

Learned something though – If the price action falls through these key points I’ve been working on like it did last night, it’s telling you something – there’s more to come! (in this case downside).  

Actually this is quite an exciting breakthrough for me despite royally stuffing up the forecast.  I doubt this will rally into the 21 May now, but should in fact turn here if I’ve got the cycle right.  Maybe this is where the support comes in.  

This totally destroys the pattern I thought I was seeing though.  Oh, well, back to the drawing board – but certainly learned something here…

Fun, isn’t it?


Mag (wiping egg from face… Hahaha).


----------



## BREND

Its not really hard to predict base metal prices. 
Copper price down, pulling zinc price down as well. Zinc should be supported at $3600/mt level. 
I already asked my clients to take profit on zinc at $4000/mt level, and to short copper (when copper is at $7650/mt). Of course not all of them listen to me, too bad for them.


----------



## toothfairy

BREND said:


> Its not really hard to predict base metal prices.
> Copper price down, pulling zinc price down as well. Zinc should be supported at $3600/mt level.
> I already asked my clients to take profit on zinc at $4000/mt level, and to short copper (when copper is at $7650/mt). Of course not all of them listen to me, too bad for them.



I don't see any of your recent postings here suggesting that metal or zinc will come down like the last 2 days, in fact you sounded quite bullish until today. Same as many of us.


----------



## nizar

toothfairy said:


> I don't see any of your recent postings here suggesting that metal or zinc will come down like the last 2 days, in fact you sounded quite bullish until today. Same as many of us.




Yeh sounds like hes a hindsight trader.
Nothing wrong with that, actually its good for the ego because your always right.

But in terms of profitability well thats another story LOL


----------



## explod

Magdoran said:


> The LME movement in Zinc is 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).




I do not have any concern with the pullback, this is a healthy correction at a point where the next moves up will create considerable attention.  From the technical perspective on your own chart the pull back is still within the recent uptrend channel.   I think the dip has more to do with a general market move caused by some currency ramping by the Federal Reserve .............hooooowever we will see what pans out


----------



## BREND

toothfairy said:


> I don't see any of your recent postings here suggesting that metal or zinc will come down like the last 2 days, in fact you sounded quite bullish until today. Same as many of us.




I posted it in the copper thread, its all there.


----------



## CanOz

Brend, what do you think the bottom will be for Zinc? And Copper?


----------



## BREND

CanOz said:


> Brend, what do you think the bottom will be for Zinc? And Copper?




Previously I actually intend to ask my clients to go long on zinc if it goes down to $3600, (now is $3645). If $3600 is not well-supported, I'll only recommend a buy at $3250. (No point buying zinc if copper still falling).

With the copper price down $600/mt within a week, some buying interest starts to come in. I beg to differ, copper is in for a deep pit. Inventory level might stop falling, this is my guess, on the assumption that it is the funds  are the ones manipulating the inventory level. So when price starts to fall, funds see no incentive to draw out the inventory anymore. Let us see if this is true...


----------



## BREND

CanOz said:


> Brend, what do you think the bottom will be for Zinc? And Copper?




Since I'll not ask my clients to short zinc, will only recommend them to buy on dips ($3200 level). But I still want them to earn some money while waiting for the price to fall. 

So today I'm recommending my clients to sell Zinc Put option, strike $3200, Jun07. 

This means that if zinc price (prompt date: Jun07) does not fall to $3200/mt by 6 Jun 07, my clients will get to keep the premium. If the zinc falls below $3200 by 6 Jun 07, they will have a long position at $3200. Having a long position at $3200 is a good level, in my view.


----------



## Nick Radge

Nice reversal off the 78.6% retracement level to complete -v of -c of -B or -2. The decline back below the wave-a high invalidates any impulsive interpretation. Massive Head & Shoulders top on weekly chart where this recent advance was the RS.


----------



## CanOz

Must have been thinking about Zinc at the same time, i was just admiring your H&S prediction coming true on kitco when i came back to ASF and saw your post.

Might be some shorting opps on zinc stocks soon.

Cheers,


----------



## BREND

I believe copper price will rebound slightly and then plunge down again. Still advising my clients to short copper on rebound.

As for buying zinc, I had advised my clients to hold back first, until copper price is stable. But I will not ask them to short zinc.

 Copper futures fell sharply Thursday in technically oriented trading, with
some of the decline blamed on nervousness about weekly copper inventory data
due out of China on Friday, analysts said. 

  The most-active July copper contract tumbled 12 cents to settle at $3.1805
per pound on the Comex division of the New York Mercantile Exchange. 

  Much of the selling was technically oriented, since otherwise the day's main
news report - a 16.2% jump in April new-home sales to an annualized rate of
981,000 - should have been supportive, traders said. 

  Technically, selling in July copper accelerated as the market fell through
the $3.2285 area. This was a roughly six-week low hit one week ago, then a
double-bottom was formed on the daily charts when copper held at $3.2300
Friday. 

  When this area failed around late-morning, the market fell by roughly a dime
in less than half an hour. The slide finally stopped at $3.1725, copper's
weakest level since April 2, when it bottomed at $3.1050. 

  LME copper has fallen below $7,000 a metric ton. If the metal closes below
this two sessions in a row, it could be "quite serious" technically, said Man
Financial analyst Edward Meir. 

  A daily research report from the London office of Triland Metals said initial
forays toward $7,200 met support, helped in part by the new-home sales data.
However, liquidation in gold and bonds "later spilled over into the base metals
sector," resulting in a break of support around $7,090 to $7,095. 

  Meir blamed some of the weakness on LME copper - which tends to lead Comex -
following nickel lower. Meir also noted that a report from the World Bureau of
Metal Statistics on Wednesday, showing a 99,000-metric-ton global copper-market
surplus during the first quarter, may have "kept a lid" on the market. 

  "And there is a bit of nervousness about the Shanghai numbers tomorrow," Meir
said. 

  Shanghai Futures Exchange inventories have risen 14,287 and 17,449 metric
tons the last two weeks. Analysts have been saying lately this has prompted
some concerns about supplies starting to build in the country after strong
imports during the first few months of the year.


----------



## rederob

Magdoran may have got the short term chart wrong, but his medium term direction is a very high probability play on fundamental grounds.
Zinc inventories are back at cyclical lows, yet the zinc price is some 25% off its peak last year.
What occurred over the past 6 months was that much surplus zinc was sold into historically high prices, concurrent with arbitrage selloffs from China.  As a result available zinc has tightened considerably and cancellation percentages are climbing.
A few more weeks of this trend will see zinc regain its former highs, and continue north.
An important distinction between copper and zinc price trends should be made on the basis that copper prices declined well after inventories had built up.  Yet zinc plunged rapidly as soon as inventories turned. 
Moreover, while copper inventories increased many hundred percent from its cyclical lows, zinc inventories barely increased a third.
The lesson we should have learned by now is that in such a strong market the consolidation phase "drains" surplus metal, so the next upleg becomes more powerful and enduring: Note this is well demonstrated by nickel which led the base metal price boom and continues to power on at logically unsustainable levels.
I expect copper has the potential to follow in nickel's footsteps, although the supply response is mooted to overcome any demand shortfalls.  My point here being that what is "mooted" has been mooted before, to the detriment of the mooters, so to speak!


----------



## Col Lector

Mmmm
The article below is partial an extract from "Resource Investor" website this evening.....it seems to confirm what zinc-bulls want to hear....ie, that China now a net importer of zinc, and that the high exports Oct to Mar were largely a response to the announcement of introduction of the 5% export tax. 

How the further export tax increase to 10% for lower grade zinc  influences Chinese domestic prices, and hence demand for imports will be interesting, particularly as this is occurring at a time when new regulations to rein in small/inefficient/polluting zinc mining & smelting are being put in place......

Zinc concentrate import figures would help to get a fuller picture...but from reports I have read recently, demand is high.
Post this announcement Zn currently down 1.4% on LME, vs Cu -3%


*China's Copper Imports in April down 8.25% From March* 

By Interfax-China
25 May 2007 at 09:14 AM GMT-04:00

SHANGHAI (Interfax-China) -- China's Customs General Administration today released statistics of base metal imports and exports during the first four months of the year.  
Refined copper imports in the first four months of the year totalled 669,697 tonnes, ballooning 141.7% from same period last year. Imports in April soared 161.5% from the same month last year to 186,212 tonnes, but fell 8.25% from March's level of 202,955 tonnes. 
Refined zinc exports in April were 13,121 tonnes, representing a fall of 31.0% from the same month last year and a 60.97% decline from the previous month due to the 5% export tax levied on refined zinc effective last November as well as stronger domestic prices than on the London Metal Exchange. 
Imports of refined zinc jumped 54.1% year-on-year to 19,679 tonnes in April. China became a net importer of refined zinc in April after it maintained net export status for nearly six months since October last year.


----------



## Col Lector

Further to the above post.....*MetalInsider* today reports thatover the period of net-exports Oct>March........

"It’s important to remember that China has remained a consistent net importer of zinc alloy in that period. Cumulative net imports of alloy were 52,416t in Jan-Apr 07, down from 71,000t in the same four-month period of 2006.
The country’s hunger for zinc concentrates, meanwhile, continues to grow. Imports hit a fresh monthly high of 169,407t (bulk weight) in April, while cumulative imports in the Jan-Apr period were 533,725t, more than double the 225,000t imported in the same period of 2006."

MetalInsider is definitely a source worth subscribing to....a free & very comprehensive daily emailed newsletter for nix from LME's Sucden


----------



## rederob

Metals had their strongest day for a long time, overnight: Zinc up about 6% and copper a shade more.
I know Radge does some good work with his charts, but unintelligible comments are not my cup of tea.  Was he suggesting up or down near term: I guess he knows, but not saying is as useful as posting the chart itself.
I remain bullish, and even more so given the inability of technical traders to trash base metals thus far into May.


----------



## BREND

I'm still bearish in the short term, believe that copper and zinc still have rooms to fall.


----------



## toothfairy

rederob said:


> Metals had their strongest day for a long time, overnight: Zinc up about 6% and copper a shade more.




Rederob, I think you can help me with this. I posted this question before and I thought it was clarified but today I am confused again. It is to do with inconsistence in prices of Zn (or Cu) being posted from different sources.

As you mentioned that POZ & POCu went up about 6% overnight which means closing prices in LME which was about 4-5 am our time. This can be confirmed if you check it from Kitco.

Try looking @ www.baemetal.com and you will find they both drop from 24/05/07's prices / MT of $7375 (Cu) & $3655 (Zn) to 25/05/07's prices of $7145 (Cu) & $3610 (Zn). This is echoed by www.metal.com as well. How do you explain that? I know there are "official" & "closing" prices etc. but how can it be so much different. From up 6% to a down 1% quote.

Cheers


----------



## BREND

toothfairy said:


> Rederob, I think you can help me with this. I posted this question before and I thought it was clarified but today I am confused again. It is to do with inconsistence in prices of Zn (or Cu) being posted from different sources.
> 
> As you mentioned that POZ & POCu went up about 6% overnight which means closing prices in LME which was about 4-5 am our time. This can be confirmed if you check it from Kitco.
> 
> Try looking @ www.baemetal.com and you will find they both drop from 24/05/07's prices / MT of $7375 (Cu) & $3655 (Zn) to 25/05/07's prices of $7145 (Cu) & $3610 (Zn). This is echoed by www.metal.com as well. How do you explain that? I know there are "official" & "closing" prices etc. but how can it be so much different. From up 6% to a down 1% quote.
> 
> Cheers




Of course there is a big different. 

Official price is the closing price for 2nd ring, which is around 8pm Singapore time. And closing price is around 1am Singapore time, which is 5 hours away from 2nd ring.


----------



## wayneL

rederob said:


> Metals had their strongest day for a long time, overnight: Zinc up about 6% and copper a shade more.
> I know Radge does some good work with his charts, but unintelligible comments are not my cup of tea.  Was he suggesting up or down near term: I guess he knows, but not saying is as useful as posting the chart itself.
> I remain bullish, and even more so given the inability of technical traders to trash base metals thus far into May.



Red,

As I've said often before. Let your analysis stand without puerile comments such as that above. There is no need for it and it shows a lack of understanding of technical trading.

Cheers


----------



## rederob

BREND said:


> Of course there is a big different.
> 
> Official price is the closing price for 2nd ring, which is around 8pm Singapore time. And closing price is around 1am Singapore time, which is 5 hours away from 2nd ring.




I found that a bit confusing.
The LME has three trading platforms - the open outcry market (ring trading), Inter-office telephone market, and the LME Select market. 
During *ring trading *up to 11 ring dealers at a time trade each LME contract in specific 5-minute periods "rings" (based on the shape of the trading area). 
The *Inter-office telephone market *is a 24 hour global market place transacted between member companies over the phone. 
*LME Select screen trading* system is the LME's official electronic trading platform, where accredited traders execute trades electronically. There are about 100 traders involved in the LME trading. 

All LME prices are quoted in US Dollars, but the LME permits contracts in sterling, Japanese yen, and Euros. Additionally, the LME provides official exchange rates from US Dollars for each of the other accepted currencies.

In more detail, open outcry trading begins at 11.45am. After a break, the process is repeated. The second part of this session results in settlement and official prices, at or near 1:15pm. 
After official prices are announced, a period of trading called "the kerb" begins, with all contracts trading simultaneously. The second ring, or the afternoon session, begins at 3:20pm, following the structure of the first ring and ending with a 25-minute kerb period from 4:35pm to 5pm. 
Sometimes quoted prices are based on the closing kerb, but this is not the "official" closing price.

LME ring trading runs for 5.25 hours and electronic trading runs for 18 hours, closing at 5pm and 9pm respectively. So these different trading sessions give rise to metals websites displaying different prices (apart from the fact that quoted prices during live trading are 20 minutes delayed).


----------



## toothfairy

BREND said:


> Of course there is a big different.
> 
> Official price is the closing price for 2nd ring, which is around 8pm Singapore time. And closing price is around 1am Singapore time, which is 5 hours away from 2nd ring.




Ok & thanks Brend, you are getting closer to it, but that's not enough as I am a very scientific sort of person.(But no, I am not an accountant thanks!) Let's analyse the Kitcometal's most recent chart for Zn (since we are in the Zn thread now and yes, sorry I don't read the copper thread much). Last night Singapore time 8pm == N.Y. time 8pm and that should be the LME official close and the price was $1.610 which is not the same as $1.6375 quoted by the others. Isn't 2.75c significant enough if you have a milloin lb contract?


----------



## rederob

Wayne
Your "moderator" role allows you to delete my post in response to yours, yet your comment calling my comments "puerile" still stands.
How does that fit in with the sense of "harmony" you want to foster.
Especially given that my post "explained" the "technical traders" I was referring to.
There was nothing in my post in response to you that was deliberately offensive except that you have chosen to take it as a personal rebuke, which if you read carefully it was not intended to be:


> I won't call you a moron Wayne, but I was actually referring to the Commodity Trade Advisers (or CTAs) that dominate price setting of LME contracts.
> I suggest you pm me next time unless you are happy to throw eggs at you face.
> I'm more than happy to defend what I say, even when I post in response to those "technical traders" that post here.




Wayne, it seems you have little or no understanding of the role of Commodity Trade Advisers and their influence on the price structure of metals traded on the LME.  The CTAs advise the funds and the funds spend the big bucks that gives us our "official closing prices" via the morning's second trading session which is indicative of peak contract liquidity (as a rule).
Although the CTA's are mindful of market fundamentals, they "direct" the market up or down principally on technical factors.
I believe you would be aware of how powerfully a market can move when buy or sell stops are triggered and cascade on one another. The technicians "run" these stops and they remain an important consideration for any traders wanting to go long, or short the market.
Those that recall last May will know that funds bailed out of base metals (especially copper) en masse last year and "trashed" the market for months to come.
This, Wayne, is what I was talking about.
So before you get on your moderator high horse again, try to read the sense of what I was saying based on the market I was talking about: And not immediately assume I must be having a go at you or other technical traders.
Frankly, I think we both have bigger fish to fry.


----------



## wayneL

rederob said:


> Wayne
> Your "moderator" role allows you to delete my post in response to yours, yet your comment calling my comments "puerile" still stands.
> How does that fit in with the sense of "harmony" you want to foster.
> Especially given that my post "explained" the "technical traders" I was referring to.
> There was nothing in my post in response to you that was deliberately offensive except that you have chosen to take it as a personal rebuke, which if you read carefully it was not intended to be:
> 
> 
> Wayne, it seems you have little or no understanding of the role of Commodity Trade Advisers and their influence on the price structure of metals traded on the LME.  The CTAs advise the funds and the funds spend the big bucks that gives us our "official closing prices" via the morning's second trading session which is indicative of peak contract liquidity (as a rule).
> Although the CTA's are mindful of market fundamentals, they "direct" the market up or down principally on technical factors.
> I believe you would be aware of how powerfully a market can move when buy or sell stops are triggered and cascade on one another. The technicians "run" these stops and they remain an important consideration for any traders wanting to go long, or short the market.
> Those that recall last May will know that funds bailed out of base metals (especially copper) en masse last year and "trashed" the market for months to come.
> This, Wayne, is what I was talking about.
> So before you get on your moderator high horse again, try to read the sense of what I was saying based on the market I was talking about: And not immediately assume I must be having a go at you or other technical traders.
> Frankly, I think we both have bigger fish to fry.



Thank you for clarifying your meaning and intent, though forgive me if I regard sections of your explanation as disingenuous.

The construction of your previous post left me with an entirely different conclusion as it left pertinent information out. You should be more careful with this and would have expected better from a self described intellectual such as yourself.

BTW moderating is not about high horses. It is a role we carry out in good faith and the best of intentions. It upsets some. _que sera sera_.

Cheers


----------



## BREND

rederob said:


> Although the CTA's are mindful of market fundamentals, they "direct" the market up or down principally on technical factors.
> I believe you would be aware of how powerfully a market can move when buy or sell stops are triggered and cascade on one another. The technicians "run" these stops and they remain an important consideration for any traders wanting to go long, or short the market.




rederob, yes CTAs who are the big players in the metal market are mostly technical traders, traders who are relying on fundamental to make his futures trading decision will not be making profitable trades.

Last time heard that you are an investment analyst, I'm thinking of switching my career to become an investment analyst in future. Can you give me advise on getting into this profession?


----------



## rederob

BREND said:


> Last time heard that you are an investment analyst, I'm thinking of switching my career to become an investment analyst in future. Can you give me advise on getting into this profession?



It's amazing what people hear!
Did they tell you how much I earn?


----------



## GREENS

Red or Brend, could either of you please tell me when valuing zinc stocks, do you base production numbers (i.e. tonnes or zinc production) on a companies zinc concentrate or contained zinc? 

For example: in CBH’s 1Q 07 report they had zinc concentrate production of 28,200t with contained zinc of 14,500t. Which of these production numbers is multiplied by an average zinc price for a current or forecasted period in order to get a feel for the companies’ revenue generation?


----------



## BREND

rederob said:


> It's amazing what people hear!
> Did they tell you how much I earn?




Actually you told me that you are an analyst.


----------



## rederob

GREENS said:


> Red or Brend, could either of you please tell me when valuing zinc stocks, do you base production numbers (i.e. tonnes or zinc production) on a companies zinc concentrate or contained zinc?
> 
> For example: in CBH’s 1Q 07 report they had zinc concentrate production of 28,200t with contained zinc of 14,500t. Which of these production numbers is multiplied by an average zinc price for a current or forecasted period in order to get a feel for the companies’ revenue generation?



Only count the "metal".
The concentrate has other metals (byproduct) and these may be significant within the concentrate.  For example, look at how Oxiana accounts for its "zinc price" costs at Golden Grove.   Elsewhere I recall recently reading that Newmont's Batu Hijau copper-gold mine in Indonesia was producing metal in concentrate at minus 19cents a pound (sorry, I can't find the article) after the gold credit.
Kagara's polymetallic circuits make accounting for its zinc quite difficult, so one needs to rely on its "guidance", as this gives an idea of ore sequencing.
Presently Kagara is weighing more into its copper, which now seems a good thing given copper's recent spike higher.


----------



## GREENS

Thanks for the detailed response red, it is much appreciated. Just to clarify your point because I am still not 100% sure; you value a company based on its contained zinc (or actual metal), but must also take into account any profitability that may occur as a result of particular byproducts or other metals found in the concentrate (which in fact will vary from mine to mine and hence company to company)? 

It’s has been relieving to finally see LME inventories continue there decline after the short term rise we saw early this year. I believe if we see a continuation of falling inventories, there is a good chance that there will be a spike in the zinc price sometime in the short to medium term and is just a matter of patience for the time being. With LME inventories over the past 30 days dropping at a rate of approx 680t/day and recently surpassing previous inventory lows of late 06, when at this point in time the POZ was over $2/lb, it appears that zinc is fundamentally strong at present. 

If there is any positive correlation to what happened with nickel when inventories draw downs approached realtively low levels, and the actions of zinc, then we could possibly see the POZ follow a similar (in % terms) rise,  as long as inventories continue to fall constitantly.  

Red I am interested in your thoughts on this as I am still in the process of learning:

•If inventories continue to fall, around what inventory level would you consider being critically low or relatively low levels that could trigger a spike to occur (if in fact the situation does arise)?
•One other thing I have done an analysis on the possible movements in the zinc price based on the past movements of nickel (assuming a near perfect correlation), do you think there is a fairly strong positive relation ship between nickel and zinc (i.e. use nickel as a guide to how zinc may perform if inventories continue to fall or reach critical lows).

Greens


----------



## Captain_Chaza

Ahoy Officer Red Rob

As you know I am just an Old fashioned Seaman who sails with NO fundamentals 
However I learnt long ago that most explorers set out to find a certain metal

It was found in those early days that there were either Lead- Zinc deposits 
Nowadays you would call them Zinc-Lead deposits

It was also found there were Gold- Copper deposits
Nowadays you would call them Copper- Gold deposits

It has also been documented that some explorers set out to find Oil but only found Gas

Diamond Joe Gutnick was told by his chief rabbi in NY that if he went to WA he would find Diamands
Unfortunately he didn't and only found Gold and lots of it  (GCM)

My point is 
Mother Nature has a funny sense of humour when it comes to Commodities  and Fundamental Analysis and in particular when these explorations are "Well-costed and planned in advance"

Salute and Gods Speed
NB: "The Wind Calls the Tune"


----------



## Col Lector

Gidday Zincers,
While we are cruising the world.....
This article  sourced today has some potentially big implications for zinc....in both the short-term  supply(Russian as a net exporter), and longer-term when the  doubling of demand predicted for construction/automotive materialises.. Thoughts??


Newsmaker: ChTPZ Group  
Headquarters: Moscow  
Date: 29/05/2007 
Length: Approx. 660 words  
 Category: Metals & Mining

Stock Symbol: N/A  
Stock Index: N/A  


*Chelyabinsk Zinc Plant Commercial Director Forecasts Russian Zinc Consumption and Production to Grow*

MOSCOW (RNWire) - In the next five years, zinc consumption in Russia may nearly double (up to 400,000 tons), stimulating domestic zinc mining and refining, Chelyabinsk Zinc Plant (CZP) (RTS: CHZNG, LSE: CHZN) Commercial Director Berislav Galovich said at the 11th Zinc and Its Markets seminar held in Madrid by Metal Bulletin.

Addressing conference participants, Mr. Galovich described the current zinc industry situation in Russia and the CIS states, as well as its past and forecasts for the future. In particular, he noted that the majority of producers have successfully overcome the difficulties of the transition period and are ramping production up. Thus, in 2006, zinc production in Russia made about 236,000 tons, whereas the total production level for all the CIS countries almost reached that of the 1980s (750,000 tons annually). The largest zinc producers in the CIS are Chelyabinsk Zinc Plant (production output 148,384 tons in 2006) and Kazzinc Plant (Kazakhstan) (production output 289,000 tons in 2006). CZP is the only zinc plant in the CIS producing SHG zinc confirmed by LME certificate, Galovich pointed out.

According to the CZP Commercial Director, production of zinc concentrate in Russia began to rise in the second half of 2006. By year end, Russian mining companies had produced 171,000 tons of zinc concentrate. Russia possesses 17% of world zinc reserves (approximately 45 million tons) and the two largest zinc deposits in the world (Ozyornoe and Kholodninskoe, Republic of Buryatia). Considering today's high prices for zinc and growing demand for the metal in the world, greater interest by investors in exploration of these deposits is expected, allowing a doubling of zinc concentrate production in Russia in the coming 5-7 years, the spokesman said. 

Zinc consumption in Russia in 2006 reached 174,000 tons, compared with 900,000 tons annually in the Soviet days. The significant difference in consumption is due to decreased supplies to the military industry, Berislav Galovich explained. In Russia, most zinc (over 60%) is used for the production of galvanized steel, mainly for the automobile industry and construction. According to the CZP Commercial Director’s forecast, in comparison with 2006, construction volumes will increase by more than 50% by 2010, whereas automobile production in Russia will double by 2015. Beyond this, there is a substantial potential that zinc consumption in such areas as alloy production and usage in the chemical industry will increase.

Despite increasing zinc consumption within the country, Russia remains to be a zinc-exporter. This is due to production exceeding consumption (by 62,000 tons in 2006) within the country, as well as increased competition with Kazakhstan and Uzbekistan producers. Mr. Galovich noted that in 2006 Russian enterprises began to pay more attention to the export sales. Also there appears to be a trend to replace exports to the spot market with long-term contracts with foreign customers.

In his conclusion to the report, Berislav Galovich again drew the audience's attention to the main structural changes which have happened lately in the industry, as well as the investment requirements. In particular, among the changes he pointed out privatization in the industry, integration with the copper producers and the vertical integration of mines and smelters. According to the CZP Commercial Director, among the future investment requirements there are: greater availability of Russian investment capital, higher credit ratings of zinc producers, and readiness of foreign investors/partners to take part in mine and smelter construction projects, as well as partnership among producers aimed to improve project management, operations management and introduce technical innovations.

About Chelyabinsk Zinc Plant

Chelyabinsk Zinc Plant OJSC is a leading Russian zinc producer. It is responsible for approximately 60% of Russian zinc production volume. In 2006 the plant produced 148,384 tons of SHG zinc. 
52.34% shares of CZP belong to ”NF Holdings B.V.” (Netherlands). 50% shares of NF Holdings B.V. belong to Arkley Capital S.Ã  r.l., Luxemburg. 
Ordinary shares of CZP are traded on the RTS exchanges, under ticker CHZNG, and Global Depository Receipts (GDR) are traded on the London Stock Exchange under ticker CHZN.




About ChTPZ Group

ChTPZ Group consists of Chelyabinsk Pipe Plant OJSC (RTS: CHEP), Pervouralsky Novotrubny Zavod OJSC (RTS: PNTZ), ChTPZ-Complex Pipe Systems (maintenance company), two metal trading companies, MeTriS and TIRUS, and ChTPZ-Meta, a company specializing in scrap metal collection and processing. Total turnover of the Group exceeds US$2 billion. Arkley Capital S.Ã  r.l., Luxembourg, manages ChTPZ Group’s assets.


----------



## rederob

GREENS said:


> •If inventories continue to fall, around what inventory level would you consider being critically low or relatively low levels that could trigger a spike to occur (if in fact the situation does arise)?
> •One other thing I have done an analysis on the possible movements in the zinc price based on the past movements of nickel (assuming a near perfect correlation), do you think there is a fairly strong positive relation ship between nickel and zinc (i.e. use nickel as a guide to how zinc may perform if inventories continue to fall or reach critical lows).
> 
> Greens



Greens
There are 4 main levels of supply:

Exchange holdings (LME & Shanghai)
merchant inventory
Producer inventory, and
Consumer inventory
"Balances" of "excess metal" differ markedly by commodity type, so there is no rule I would rely on.
For example, a measure of aluminium metal availability/tightness is the change to  "Japanese port stocks".
That said, exchange inventories are a transparent measure of supply, and also present consumers with a reliable pricing mechanism.  So when exchange inventories go below a week's consumption, consumers get worried and need to ensure they don't get caught short.
Prudent consumers will ensure they maintain stock to maintain production to meet all known orders. Other consumers will go hand to mouth, as it were, buying only when their customers need to be fed.
It's the hand to mouth feeders that drive the prices through the roof, and cause the continuing cancellation of warranted metals that maintain the fundamentals.
My suspicion is that the next big price movement will occur when zinc inventories drop below 50k tonnes.  Until then it's more likely we get whipsawing, with upside bias.

In relation to trying to correlate zinc with nickel, good luck.
My view is that the patterns will give us strong clues, and if there proves to be a strong lagged relationship, then I will be happy with my holdings of zinc equities.


----------



## BREND

I've asked my clients to short zinc futures today.


----------



## Kauri

*MI WEEK IN REVIEW: *Any expectations that we had seen the worse of the fund-selling storm were last week dashed with new waves of liquidation from technical and systems-based funds washing over the LME complex. 

Somewhere behind the day-to-day noise of the market-place there is a sense that zinc’s underlying dynamics are shifting from short-term negative to short-term positive but while the black-box players are in the ascendancy, fundamentals must take a back seat. 

*Here We Go Again*
After several days of successive fund-induced pain the previous week LME 3-month zinc had staged an end-week bounce to close Friday, May 18 at $3,720. 

Last Monday saw that bounce extended to $3,790 with opportunists and other coat-tail hangers covering back short positions. The tentative recovery continued on Tuesday morning with a retest of a former resistance level at $3,835. However, just as the bulls were preparing to put their heads back above the parapet, they were sent running for cover by a new round of fund selling. 

It swept through the LME complex in successive waves over the next three days sometimes exacerbated by volatility and poor liquidity as London locals got out of the way of what one called “the freight train”. 

The selling action climaxed on Thursday afternoon, LME 3-month zinc following copper and sinking to a low of $3,540, where it found support from the 100-day moving average. 

As in the week before, Friday brought the reaction to the action with a tentative recovery to $3,640 by the day’s close. It was a third successive week-to-week loss, although the $80 given up was smaller than the previous week’s $330 net loss. That said, zinc is now showing a year-to-date net loss of 13.95% having missed the early-year bull party and now being hit by the overspill of selling in the likes of copper. 

This mass shift in positioning by the funds seems to have been triggered by a combination of seasonality (“sell in May and go away”), portfolio re-weighting (no coincidence in our mind that this sell-off started around the time of the last meeting of the US Fed’s interest-rate-setting committee) and technical performance (an over-extended copper market in particular).

In the case of LME zinc it has seen the likes of the CTA systems-based funds switch from collective long of around 20% of historic capacity in early May to around 10% collective short as at the end of last week. Such a turnaround is equivalent to something like 375,000t of metal. 

*China Switch*
Such funds do not trade off the market’s fundamentals, so trying to find a reason for the recent sell-off in the market’s underlying dynamics is like trying to hammer a square peg into a round hole. 

However, zinc’s earlier underperformance relative to most of the rest of the LME complex is easily explained by the fact that China had been pumping metal out into the world market since the end of last year. 

That has served to cloud the other dynamics at work and, not surprisingly, left everyone a bit confused as to where zinc really is right now. The best sound bite of the industry conference underway last week probably came from Al Paterson, a trader at Ocean Partners in the US: “Before China, I used to have faith in my forecast--now all I do is worry about China.”

Both the International Lead and Zinc Study Group and the World Bureau of Metal Statistics have pegged the refined zinc market as being in surplus in Jan-Mar to the tune of 84,000t and 119,000t respectively. But be warned that both calculations will overly reflect low apparent consumption in China caused by the impact of those high exports. 

As such, the key development in zinc’s fundamentals is the switch back by China to net importer of zinc in April. 




This does not seem to have had anything to do with the most recent adjustment to the export tariff regime””the 5% rebate on SHG zinc was left unchanged””but more an end to what appears to have been a major de-stocking cycle, encouraged by high prices late last year and favourable price arbitrage. 

The removal of that metal cushion now seems to be feeding through into a renewed downtrend in LME warehouse stocks of zinc, which are punching out fresh cycle lows with each passing day. In this context, the nearby market structure””cash-to-3-month metal flipped into $1 contango at Thursday’s valuations before returning to $5 backwardation on Friday””continues to look anomalous. 

It is by no means certain that Chinese exports won’t pick up again if the price is right, but it seems unlikely they will hit the sustained pace seen over the Nov 06-Mar 07 period. 

Similarly, although new mine capacity is starting to build, it is doing so only slowly and being mitigated by production losses such as that we mentioned in this column last week at Australian producer Perilya. 

This market remains finely balanced, not that you’d know that from the waves of technical selling that have hammered it for the past two weeks. The “black-box traders” follow their own price drivers, not fundamentals. As with coppeit may be a case of “caveat venditor”…”seller beware.”


----------



## Captain_Chaza

BREND said:


> I've asked my clients to short zinc futures today.




Did anybody listen to you?

In the Good Old Days (30+ years ago) we used  the "Singapore/KL Model"
ie. Tell half your clients to Buy
    Tell the other half to Sell

What ever happened we knew we could never lose all of our client base

"Safety at Sea was Paramount in those days"

I think these sort of tactics are illegal nowadays? 
I wonder if it was legal in those days?
Hmmm!

Salute and Gods Speed


----------



## toothfairy

BREND said:


> I've asked my clients to short zinc futures today.




I beg to be different, I bought more ZFX shares today


----------



## BREND

Captain_Chaza said:


> Did anybody listen to you?
> 
> In the Good Old Days (30+ years ago) we used  the "Singapore/KL Model"
> ie. Tell half your clients to Buy
> Tell the other half to Sell
> 
> What ever happened we knew we could never lose all of our client base
> 
> "Safety at Sea was Paramount in those days"
> 
> I think these sort of tactics are illegal nowadays?
> I wonder if it was legal in those days?
> Hmmm!
> 
> Salute and Gods Speed




Haha, so funny, we never use this kind of tactics.


----------



## BREND

toothfairy said:


> I beg to be different, I bought more ZFX shares today




You are correct, and I'm correct too. Our investment period are different. 
I'm also interested in ZFX, but at lower price.


----------



## BREND

BREND said:


> I've asked my clients to short zinc futures today.




I'm right again, zinc is down another $40/mt today.


----------



## michael_selway

BREND said:


> I'm right again, zinc is down another $40/mt today.




hi yes, but will it be significantly up in the MT or LT in your view?

thx

MS


----------



## BREND

michael_selway said:


> hi yes, but will it be significantly up in the MT or LT in your view?
> 
> thx
> 
> MS




My view on zinc is that it will continue to fall in the mid-term, so I'll still recommend my clients to short zinc on rebound.

I'm a futures player, so mid-term can be just 1-4 weeks' time.
Long-term is hard to say for now.


----------



## BREND

*China to become net zinc exporter this year*

China is set to become a net exporter of refined zinc this year, due to oversupply pressure and a slowdown in domestic demand, said a Chinese zinc expert at the China International Nonferrous Metals Market Conference 2007, held in Hong Kong yesterday. 

Despite the Chinese government's decision to introduce a 5 percent export tax on 1# zinc on November 1, 2006 and increase the export tax on refined zin from a current 5 percent to 10 percent, effective June 1, the country will remain a net zinc exporter for the rest of the year, according to Feng Juncong, a zinc expert with Beijing Antaike Information Co. Ltd., a mining and metals information provider affiliated with China Nonferrous Metals Industry Association. 

China returned to net zinc importer status in April this year, after maintaining net exporter status for nearly six months since October last year. 

"There will be no change in the 5 percent value-added tax (VAT) rebate on 0# refined zinc, which makes up over 65 percent of China's zinc exports. As a result, we will not see a significant reduction in zinc exports this year," Feng said. 

China's zinc oversupply will reach nearly 200,000 tons this year, she forecasted. 

Based on first quarter production levels, the average monthly production this year will be up 30,000 to 40,000 tons from 2006. Domestic consumption is also set to increase 270,000 to 280,000 tons this year, from 3.39 million tons in 2006, she said 

"China produced 3.15 million tons of refined zinc in 2006, at an average rate of 260,000 tons per month. However, zinc smelting capacity reached 4.3 million tons last year. In the past seven years, China's zinc smelting capacity has grown on average 12.8 percent each year. We predict growth to continue to climb until 2010, when China's total zinc smelting capacity will reach 5.8 million tons, up 45.7 percent from 2005," she said. 

China's rapid capacity expansion has been mainly driven by rising zinc prices, technological upgrades and government policies that encourage new projects above 100,000 tons in annual capacity, she explained. 

China's zinc consumption slackened in August last year, due to pressure from increasing zinc prices. Actual consumption growth decreased from 15 percent in 2005, to 9.8 percent last year. 

According to her predictions, China's zinc consumption will remain at 7.6 percent between 2007 and 2010, during which domestic zinc consumption will exceed 4.7 million tons. 

She further predicted domestic zinc spot prices would fall to 26,000 yuan (US$3,399.14) per ton in the second half of this year, due to a slowdown in domestic consumption and an eased zinc concentrate supply. The benchmark spot price for 0# refined zinc was 30,100 yuan (US$3,935.15) per ton yesterday on the Shanghai Yangtze River Nonferrous Metals Market. 

China's zinc concentrate production amounted to 2.84 million tons in 2006, up 10.9 percent from 2005 while the annual average growth rate was 7.2 percent from 2000 to 2005.

There is a saying, buy whatever China is buying. Since China becoming a net exporter of zinc, I'll not be a buyer of zinc, at least for now.


----------



## toothfairy

BREND said:


> My view on zinc is that it will continue to fall in the mid-term, so I'll still recommend my clients to short zinc on rebound.
> 
> I'm a futures player, so mid-term can be just 1-4 weeks' time.
> Long-term is hard to say for now.




Brend, I won't have read all of your postings so forgive me if you have mentioned this somewhere else before. Just wondering whether your predictions / recommemdations are based on which of the following areas :
1) technical analysis / charts
2) fundamentals
3) insider
4) six sense + casino + guts
5) Or a combination of the above.
Most people on this forum like to pin themseleves to either (1) or( 2). I think I am more (2) and (4). And the real insiders don't post.
Cheers.


----------



## drasicjazz

i think this is the place to talk about zinc
i m a newbee but i like to share the  experience form the liftoff ZNC
not ramping... not holding but informing
cheers


----------



## BREND

toothfairy said:


> Brend, I won't have read all of your postings so forgive me if you have mentioned this somewhere else before. Just wondering whether your predictions / recommemdations are based on which of the following areas :
> 1) technical analysis / charts
> 2) fundamentals
> 3) insider
> 4) six sense + casino + guts
> 5) Or a combination of the above.
> Most people on this forum like to pin themseleves to either (1) or( 2). I think I am more (2) and (4). And the real insiders don't post.
> Cheers.




I would say combination of the above, but like more traders / investors I place more emphasise on 1 & 2. Sometimes I pray to Jesus before initiating a position, if I don't peace, I may not initiate that trade.


----------



## Damuzzdu

BREND said:


> I'm right again, zinc is down another $40/mt today.




Hate to burst yr balloon Brend, but Zinc ain't down tonite...if fact rallying hard.

So how are yr clients feeling now if they followed yr advice on Tuesday, a little squeezed no doubt...hmmm??? 

Zinc up $97.50/Mt as I type US$3690.00, funds have turned around and gone long after being short for Monday, Tuesday and Wednesday morning.

Cheers


----------



## BREND

Damuzzdu said:


> Hate to burst yr balloon Brend, but Zinc ain't down tonite...if fact rallying hard.
> 
> So how are yr clients feeling now if they followed yr advice on Tuesday, a little squeezed no doubt...hmmm???
> 
> Zinc up $97.50/Mt as I type US$3690.00, funds have turned around and gone long after being short for Monday, Tuesday and Wednesday morning.
> 
> Cheers




Hello Damuzzdu, you are outdated, those short positions are already out. 

If you look into Copper thread, I had advised my clients to short zinc at $3700today.


----------



## BREND

BREND said:


> Hello Damuzzdu, you are outdated, those short positions are already out.
> 
> If you look into Copper thread, I had advised my clients to short zinc at $3700today.




My client shorted zinc at $3700, bought back at $3640, ok? Must report?


----------



## Damuzzdu

BREND said:


> My client shorted zinc at $3700, bought back at $3640, ok? Must report?




Well done, it is always good to report a profitable trade, however i'm quite confused...

When did ur client(s) short Zinc at $3700, as the the last time Zinc cash was at $3700 apart from from during today's trading was on 23rd May, and yet according to yr posts you advised ur clients to short zinc per the following post on 29th May...



BREND said:


> I've asked my clients to short zinc futures today.




Now, according to my data from LME on 29/5 zinc official cash high was $3605??

Is this a futures contract or something???

Cheers


----------



## BREND

Damuzzdu said:


> Well done, it is always good to report a profitable trade, however i'm quite confused...
> 
> When did ur client(s) short Zinc at $3700, as the the last time Zinc cash was at $3700 apart from from during today's trading was on 23rd May, and yet according to yr posts you advised ur clients to short zinc per the following post on 29th May...
> 
> 
> 
> Now, according to my data from LME on 29/5 zinc official cash high was $3605??
> 
> Is this a futures contract or something???
> 
> Cheers




When you trade metals at LME, its always a 3 month futures contract, not cash contract.


----------



## michael_selway

BREND said:


> My client shorted zinc at $3700, bought back at $3640, ok? Must report?




thats very little "profit" for quite a bit of risk

also how much is brokerage or any other taxes for your clients who execute this trade?

thx

MS


----------



## BREND

michael_selway said:


> thats very little "profit" for quite a bit of risk
> 
> also how much is brokerage or any other taxes for your clients who execute this trade?
> 
> thx
> 
> MS




The net profit is about a month's wage for a Singapore worker, for only 2 hour's effort.


----------



## michael_selway

BREND said:


> The net profit is about a month's wage for a Singapore worker, for only 2 hour's effort.




but how much initial outlay, and have you had any losses incurred with these sort of trades?

thx

MS


----------



## BREND

michael_selway said:


> but how much initial outlay, and have you had any losses incurred with these sort of trades?
> 
> thx
> 
> MS




The minimum capital required is the margin of the metal. 
In the case of zinc, margin required is USD10,000plus, my client profit for 1 lot is USD1500, so percentage gain is 15% in 1 day.

I do not win all the time, if you look into my blog: http://basemetal-trading.blogspot.com/, sometimes I win, sometimes I lose, but so far winning trades is more than losing trades. Who can win all the times? 

I guess u are an equity investor, I invest in equities too (Singapore, Australia and US market). The perceptive of an equity investor and a futures dealer is not the same, very different actually.

I had participated in an America nationwide stock-pick competition organised by Zacks.com. Currently my ranking is 149th out of 25,000 participants, this makes my top 0.6% of the competition. My portfolio profit since start of 2007 is 26% now. More information here: http://basemetal-trading.blogspot.com/2007/05/goldmans-global-alpha-hedge-fund-falls.html


----------



## Damuzzdu

BREND said:


> The minimum capital required is the margin of the metal.
> In the case of zinc, margin required is USD10,000plus, my client profit for 1 lot is USD1500, so percentage gain is 15% in 1 day.
> 
> I do not win all the time, if you look into my blog: http://basemetal-trading.blogspot.com/, sometimes I win, sometimes I lose, but so far winning trades is more than losing trades. Who can win all the times?
> 
> I guess u are an equity investor, I invest in equities too (Singapore, Australia and US market). The perceptive of an equity investor and a futures dealer is not the same, very different actually.
> 
> I had participated in an America nationwide stock-pick competition organised by Zacks.com. Currently my ranking is 149th out of 25,000 participants, this makes my top 0.6% of the competition. My portfolio profit since start of 2007 is 26% now. More information here: http://basemetal-trading.blogspot.com/2007/05/goldmans-global-alpha-hedge-fund-falls.html




Brend,

Following yr blogspot. very interesting, and very nicely presented.

I'm guessing the charts are from the Bloomberg Trading platform??

A couple of other questions:

Entry for May 17th....

Unrealised profit is: (7685 - 7120) x 25 = USD14,125 What is the 25 (Like a lot in Tonnes???)

Margin required is USD17,425: how do you pay for this do you lodge cash, shares or ??? It seems high to me, but may not to you. However once you lodge it how do you get it back???

Notice you now long Copper based on Shanghai stocks, do you think Copper might pull zinc with up it or ?

Cheers
Muzz


----------



## BREND

Damuzzdu said:


> Brend,
> 
> Following yr blogspot. very interesting, and very nicely presented.
> 
> I'm guessing the charts are from the Bloomberg Trading platform??
> 
> A couple of other questions:
> 
> Entry for May 17th....
> 
> Unrealised profit is: (7685 - 7120) x 25 = USD14,125 What is the 25 (Like a lot in Tonnes???)
> 
> Margin required is USD17,425: how do you pay for this do you lodge cash, shares or ??? It seems high to me, but may not to you. However once you lodge it how do you get it back???
> 
> Notice you now long Copper based on Shanghai stocks, do you think Copper might pull zinc with up it or ?
> 
> Cheers
> Muzz




Thanks. Yes charts from Bloomberg.

There are 25 tons in 1 lot of copper, aluminum, lead  and zinc futures contract. For nickel is 6 tons, tin is 5.

Shanghai stocks is always an important factor to look for anyone analysing copper. Because this give an idea if China is oversupplied with copper.

Previously I'm bearish on copper, seeing the big fall in Shanghai inventory last Friday I've turned bullish again. 

Yes, rise in copper will bring zinc price up. Between copper and zinc equities, I prefer copper, ie Southern Copper and Freeport (both listed in NYSE). China has a lot of zinc supply, once LME zinc price is high, China merchants may start to deliver zinc warrants into LME warehouse again, this will push zinc price down.


----------



## dj_420

significant rise in cancelled warrants today

http://www.basemetals.com/stocks.aspx?com=zn

looks like zinc could make a good run soon, zinc stocks well of highs from last year and LME supplies still dropping. my only zinc stock at moment is JML, started producing last week! so im hoping that they are producing in perfect time with market cycles.

am looking at picking up CBH, KZL or ZFX for next run.


----------



## toothfairy

Zn is the most steadily depleting metal stock in LME in the past 3 months yet the price is stucked like having indigestion & I am getting impatient. Can anyone explain why? In contrary, Ni stock is steadily increasing yet price stay high.


----------



## Col Lector

gidday toothfairy, Have a look at http://www.metalsinsider.com/.  The weekly review to June 4 has a good perspective on this. 
I recommend subscribing to the free daily email newsletter they offer...very current & comprehensive.


----------



## BREND

toothfairy said:


> Zn is the most steadily depleting metal stock in LME in the past 3 months yet the price is stucked like having indigestion & I am getting impatient. Can anyone explain why? In contrary, Ni stock is steadily increasing yet price stay high.




If only making money from trading is so easy...


----------



## michael_selway

toothfairy said:


> Zn is the most steadily depleting metal stock in LME in the past 3 months yet the price is stucked like having indigestion & I am getting impatient. Can anyone explain why? In contrary, Ni stock is steadily increasing yet price stay high.




this is an example of how you can find "value" in the stock market 

thx

MS


----------



## toothfairy

michael_selway said:


> this is an example of how you can find "value" in the stock market
> 
> thx
> 
> MS




If price of Zn stays low, how can there be "value" in the stock market when a company depends on it to make profit.
Look, for example today's Zn stockpile dropped the most %tage wise amongst all base metals, yet it is down the most at the moment (2% as I type). Not to mention about gold, another disappointing useles metal.
Cheers.


----------



## michael_selway

toothfairy said:


> If price of Zn stays low, how can there be "value" in the stock market when a company depends on it to make profit.
> Look, for example today's Zn stockpile dropped the most %tage wise amongst all base metals, yet it is down the most at the moment (2% as I type). Not to mention about gold, another disappointing useles metal.
> Cheers.




You have to "buy low and sell high"

If Zn price is truly worth more, eventually price will go up to match its true value

thx

MS


----------



## nizar

michael_selway said:


> You have to "buy low and sell high"




Well in my opinion, its better to buy high and sell higher.

Trying to pick a bottom is very hard. And the turnaround time could be a long time.

But when a stock is going up, momentum says it is more likely to go up further than one going sideways or down.

Add to that minimal overhead resistance, and a bit of volume on the break, and you have yourself a winner.


----------



## dj_420

toothfairy said:


> If price of Zn stays low, how can there be "value" in the stock market when a company depends on it to make profit.
> Look, for example today's Zn stockpile dropped the most %tage wise amongst all base metals, yet it is down the most at the moment (2% as I type). Not to mention about gold, another disappointing useles metal.
> Cheers.




you have to remember all these prices are much higher than historical figures, and if we see zinc stockpiles continue to deplete, dont worry the zinc price will catch up.

i would rather slow and steady increases than huge crazy volatile swings!


----------



## BREND

toothfairy said:


> Zn is the most steadily depleting metal stock in LME in the past 3 months yet the price is stucked like having indigestion & I am getting impatient. Can anyone explain why? In contrary, Ni stock is steadily increasing yet price stay high.




Zinc follows copper very closely, so when copper price falls zinc price falls as well. There is huge supply of zinc in China, and when zinc price is high again, China merchants will again deliver their goods into LME.

As for Nickel, can't u see that price is coming down slowly now?


----------



## dj_420

why would china turn back into a zinc importor again this year if zinc supplies are so high???

IMO they dumped excess on LME last year flattened the price and are now importing again as they have depleted supplies.

i will dig up article i found regarding this


----------



## BREND

dj_420 said:


> why would china turn back into a zinc importor again this year if zinc supplies are so high???
> 
> IMO they dumped excess on LME last year flattened the price and are now importing again as they have depleted supplies.
> 
> i will dig up article i found regarding this




Did u misunderstand my message? I say China may deliver zinc into LME again if price is high, this is call export, not import.


----------



## dj_420

lol

sorry my post sounds confusing, what i am saying is how much of a stockpile does china have to dump back on LME???

surely they do not have infinite supplies of zinc. they changed from exporter back to importer as they had depleted their supplies over xmas period.

also with export taxes increasing will cut the amount of "encouragement" that china has to dump on higher spot price swings.

their metal consumption is up, LME supplies down lower than when china dumped last year.

so you are bearish on zinc price??


----------



## BREND

dj_420 said:


> lol
> 
> sorry my post sounds confusing, what i am saying is how much of a stockpile does china have to dump back on LME???
> 
> surely they do not have infinite supplies of zinc. they changed from exporter back to importer as they had depleted their supplies over xmas period.
> 
> also with export taxes increasing will cut the amount of "encouragement" that china has to dump on higher spot price swings.
> 
> their metal consumption is up, LME supplies down lower than when china dumped last year.
> 
> so you are bearish on zinc price??




I'm not bearish nor bullish on zinc. Currently I need more data to predict future direction of base metals, data looks mixed, staying on the sideline now.


----------



## BREND

dj_420 said:


> lol
> 
> sorry my post sounds confusing, what i am saying is how much of a stockpile does china have to dump back on LME???
> 
> surely they do not have infinite supplies of zinc. they changed from exporter back to importer as they had depleted their supplies over xmas period.
> 
> also with export taxes increasing will cut the amount of "encouragement" that china has to dump on higher spot price swings.
> 
> their metal consumption is up, LME supplies down lower than when china dumped last year.
> 
> so you are bearish on zinc price??




I'm bearish on Lead now.


----------



## Damuzzdu

BREND said:


> I'm bearish on Lead now.




This would because of Xstrata resuming Lead supplies in July????

Cheers
Muzz


----------



## Damuzzdu

Any good fall in Zinc stocks down to 71825 Mt a fall of -1300 Mt.

With cancelled warrants running at 12% of total stocks, the available zinc from LME is nearly down to 60000 Mt.

Wonder if this will start to provide any pricing support for Zinc which has been under a little bit of pressure the last few days??

Cheers
Muzz


----------



## toothfairy

Damuzzdu said:


> Any good fall in Zinc stocks down to 71825 Mt a fall of -1300 Mt.
> 
> With cancelled warrants running at 12% of total stocks, the available zinc from LME is nearly down to 60000 Mt.
> 
> Wonder if this will start to provide any pricing support for Zinc which has been under a little bit of pressure the last few days??
> 
> Cheers
> Muzz



No, its not related at all as I mentioned previously. I won't be surprised if POZ goes down 2-3% tonight. Or if they really want to prove I am wrong, I won't complain.


----------



## BREND

Damuzzdu said:


> Any good fall in Zinc stocks down to 71825 Mt a fall of -1300 Mt.
> 
> With cancelled warrants running at 12% of total stocks, the available zinc from LME is nearly down to 60000 Mt.
> 
> Wonder if this will start to provide any pricing support for Zinc which has been under a little bit of pressure the last few days??
> 
> Cheers
> Muzz




Zinc follows copper very closely. Zinc price will rise if you see copper rise tonight. I will wait for tomorrow Shanghai inventory level before making a judgement on the copper and zinc.


----------



## dj_420

toothfairy said:


> No, its not related at all as I mentioned previously. I won't be surprised if POZ goes down 2-3% tonight. Or if they really want to prove I am wrong, I won't complain.




i would have thought it was related, cancelled warrants increase means increase in drawdowns on previously purchased metal, which in turn means more metal will have to be bought.

this happened around xmas last year, was going well until chinese dumped zinc onto market.


----------



## BREND

Damuzzdu said:


> This would because of Xstrata resuming Lead supplies in July????
> 
> Cheers
> Muzz




Correction: I mean nickel.


----------



## GREENS

Toothfairy good things come to those who wait. The only dilemma I am faced with is the chance of a market correction before the zinc bull has its run, so very hard to judge whether to fully jump on board now or wait and see how the market pans out over the next month or so, which if doesn’t play out, could be to late. Still that hasn’t stopped me building a stake in one of these companies over the past few weeks. DJ heres some interesting figures to have a glance at. There are some winners out of these even if zinc remains at current levels. (These were calculated intraday yesterday)

KZL:
•12% off its 52 week high (late 06 when zinc prices were above $2/lb)
•PE=13, PEG=0.13. 
•2 year earnings forecast Aspect Huntley = 96.5%

CBH: 
•33% off its 52 week high (late 06 when zinc prices were above $2/lb)
•PE=10, PEG=0.08
•2 year earnings forecast Aspect Huntley = 129%

ZFX: 
•6% off its 52 week high (late 06 when zinc prices were above $2/lb)
•PE=6.5, PEG=1.96
•2 year earnings forecast Aspect Huntley = 5%

PEM: 
•22% from its 52 week high (late 06 when zinc prices were above $2/lb)
•PE=9.5, PEG=0.18
•2 year earnings forecast Aspect Huntley = 51.6%

Red, thanks again for sharing your knowledge, in helping me gain greater understanding of the base metals market it is much appreciated. Just another few quick Q’s. 

1.I understand that cancelled warrents respresent a pledge to take deleivery and hence reduce the amount of metal available to the market, but how does this entire process work? For example if there are 10,000t’s of cancelled warrants does this imply that 10,000t’s will be withdrawn from LME wharehouses over time because instituions or companies pledging to take deleivery some date in the future?

2.In regards to valuing a company based on it actual metal. I just want to be clear. For example CBH;s endevour mine Produces approx 1.2Mt of ore p.a. to produce around 160,00t of zinc concentrate containing 80,000t’s of Zn, does this imply that I am basing my production forecasts (to put into a valuation) based on the 80,000t’s i.e. conatined zinc?

In regards to the laging postive correlation with nickel, I Think your target for the price of Zn which you posted a while back, could be a fairly close estimate (i.e. as long as inventories continue to decline).


----------



## rederob

GREENS said:


> I understand that cancelled warrants represent a pledge to take delivery and hence reduce the amount of metal available to the market, but how does this entire process work? For example if there are 10,000t’s of cancelled warrants does this imply that 10,000t’s will be withdrawn from LME warehouses over time because institutions or companies pledging to take delivery some date in the future?



Yes. It's that simple!


> In regards to valuing a company based on it actual metal. I just want to be clear. For example CBH;s endevour mine Produces approx 1.2Mt of ore p.a. to produce around 160,00t of zinc concentrate containing 80,000t’s of Zn, does this imply that I am basing my production forecasts (to put into a valuation) based on the 80,000t’s i.e. contained zinc?



Yes, only account for actual metal.
However, strip ratios and/or metal percentages in ore can make a huge difference to profitability.  For example, high grades mined underground could be more profitable than ten times the ore volume mined in open cut at low grades: So the sums can get blurred. 

With regard to my zinc price target, as far as I am concerned, the only issue is when inventories start to climb again at a pace that is likely to be sustained.
For the time being zinc inventories are trending beautifully and we should see the 50k inventory level achieved some time in July.
A strange thing can occur when the psychology kicks in: Consumers, fearing further tightness, buy more than they need short term.  This spikes the price considerably and traders can do well during this madness.
My personal suspicion is that a $4k benchmark price will lock in for the longer term, and like nickel we will see prices remain strong and the market remain very tight.


----------



## Col Lector

Lets hope you are right Rederob....I was a bit concerned to read earlier this week about "surging" Zn supply from Peru. Thought this may be a factor in Zn price not reflecting the continued decline in LME stocks. ie, wariness. However so far this has not found its way to LME warehouses.


----------



## Col Lector

Col Lector said:


> Lets hope you are right Rederob....I was a bit concerned to read earlier this week about "surging" Zn supply from Peru. Thought this may be a factor in Zn price not reflecting the continued decline in LME stocks. ie, wariness. However so far this has not found its way to LME warehouses.




Further to above comments...

CORRECTED - (OFFICIAL)-Peru April exports rise 10.5 pct as zinc sales surge
Thu May 24, 2007 4:42PM EDT

LIMA, May 24 (Reuters) - Peruvian exports rose 10.5 percent in April from a year earlier to $2.003 billion, thanks mainly to strong export sales of minerals, particularly of zinc, a state-run agency said on Thursday.

Mining exports jumped 11.2 percent in April to $1.325 billion -- or 66 percent of total earnings, Promperu, an agency that promotes exports, said.

Zinc exports more than doubled to $283 million, while copper sales abroad rose 16.7 percent to $554 million.

In contrast, gold exports fell 18.1 percent to $270 million compared with the same month a year earlier.

Mining is one of the economy's main drivers and regularly accounts for more than half of Peru's export earnings. The South American country is the world's No. 3 copper and zinc producer, a top-two silver producer and No. 5 in gold.

Peruvian exports in the first four months of the year rose to $7.54 billion, up 17 percent from the same period in 2006, said Promperu, formerly known as Prompex.

The United States accounted for 18.7 percent of Peruvian exports, followed by China, 13.5 percent; Switzerland, 9.2 percent, and Japan, 6.9 percent.


----------



## Damuzzdu

rederob said:


> For the time being zinc inventories are trending beautifully and we should see the 50k inventory level achieved some time in July.
> A strange thing can occur when the psychology kicks in: Consumers, fearing further tightness, buy more than they need short term.  This spikes the price considerably and traders can do well during this madness.
> My personal suspicion is that a $4k benchmark price will lock in for the longer term, and like nickel we will see prices remain strong and the market remain very tight.




Rederob,

Slightly concerned of the build up in Zinc stocks in China. In the last month these stocks have risen from 30518Mt to 44476Mt today. If the LME zinc price does start to rise and get near $4k, we could well see China resume exporting zinc back into the international market, thus keeping a ceiling on prices and even pushing back to levels where we are at now, even though stocks maybe 50K or lower.

Cheers
Muzz


----------



## michael_selway

Damuzzdu said:


> Rederob,
> 
> Slightly concerned of the build up in Zinc stocks in China. In the last month these stocks have risen from 30518Mt to 44476Mt today. If the LME zinc price does start to rise and get near $4k, we could well see China resume exporting zinc back into the international market, thus keeping a ceiling on prices and even pushing back to levels where we are at now, even though stocks maybe 50K or lower.
> 
> Cheers
> Muzz




Hi where do u get thsi info from "30518Mt to 44476Mt today"

Any links?

thx

MS


----------



## rederob

michael_selway said:


> Hi where do u get thsi info from "30518Mt to 44476Mt today"
> Any links?
> thx
> MS




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


----------



## BREND

Damuzzdu said:


> Rederob,
> 
> Slightly concerned of the build up in Zinc stocks in China. In the last month these stocks have risen from 30518Mt to 44476Mt today. If the LME zinc price does start to rise and get near $4k, we could well see China resume exporting zinc back into the international market, thus keeping a ceiling on prices and even pushing back to levels where we are at now, even though stocks maybe 50K or lower.
> 
> Cheers
> Muzz




We deal with a very huge zinc supplier in China, they have been delivering zinc into Shanghai warehouse. If LME zinc price is high, they may do the same. The real demand for base metal is very bad, what is written on the media are mostly untrue. The prices are mostly driven up by hedge funds.

As for the copper, one hedge fund and a metal company had teamed up to draw copper inventory from LME and delivery into Shanghai warehouse; to create a false impression that LME Copper is in high demand. Possibly this is happening to zinc now.


----------



## Lachlan6

Is Zinc forming a huge head and shoulders reversal pattern? Hard to tell so far, but it does look a little like one at the moment. If it breaks the neckline at 2900 (3 month cash rate), then geez, we might be headed for lower levels. Needs to break into new highs for all bets to be off. Also note the outperformance of (ZFX) compared to the price of Zinc. Can this last, or is this a sign of the markets willingness to buy into Zinifex, despite underlying weakness in the Zinc price?


----------



## michael_selway

BREND said:


> As for the copper, one hedge fund and a metal company had teamed up to draw copper inventory from LME and delivery into Shanghai warehouse; to create a false impression that LME Copper is in high demand. Possibly this is happening to zinc now.




if thsi is true price of zinc wont be going up unless Shanghai warehouse stocks go down as well?

thx

MS


----------



## rederob

BREND said:


> We deal with a very huge zinc supplier in China, they have been delivering zinc into Shanghai warehouse. If LME zinc price is high, they may do the same. The real demand for base metal is very bad, what is written on the media are mostly untrue. The prices are mostly driven up by hedge funds.
> 
> As for the copper, one hedge fund and a metal company had teamed up to draw copper inventory from LME and delivery into Shanghai warehouse; to create a false impression that LME Copper is in high demand. Possibly this is happening to zinc now.




These plays have been going on for years.
There are dozens of merchants, funds, producers, etc., so unless you are looking at the bigger picture you will only see what is transparent to you.
The fact remains that inventory drawdowns are widespread, so thinking only of what China's role is in the equation is just not good enough.
The US has been the mainstay of zinc's strength, and that position has reduced, but is still not overtaken.


----------



## BREND

Today I recommend my client to buy zinc at $3700.


----------



## dj_420

nice article on zinc

http://www.metalsinsider.com/WIR/20070611zn.html


----------



## GREENS

Large rise of Zn inventories into LME today + 2800t combined with yesterday rise of + 850 has broken the consistent draw downs. Also noticed cancelled warrants have also fallen to around the 8000t mark.  What are your thoughts Rob?  Not to worried…but nevertheless it’s not good to see this downtrend broken last this occurred we saw a large inflow of the metal into LME warehouses. Lets hope its not the start of more to come.


----------



## Col Lector

Article below suggests Xstrata remains very bullish Zinc-wise over next decade.

Zinc 
Researcher sees strong demand for years to come
By Tom Stundza 
Purchasing 
June 14, 2007  
Continued growth by the industrializing nations and the so-called “extreme economies” over the next decade should maintain demand strength for zinc. Zinc consumption could grow by between 5.6 million metric tons and 7.9 million tons, forecasts Emilio Tamargo, general manager of business development and research at Xstrata Zinc in Asturiana, Spain.

The industrializing nations tend to be Brazil, Russia, India and China, the so-called “BRIC nations,” while what investment bankers have labeled the “extreme economies” include nations such as Turkey, Poland, Romania, Egypt, Vietnam and Columbia. Tamargo tells Metal Bulletin’s 11th annual zinc conference in Madrid that the potential for substantial growth in consumption by these and the industrialized economies countries “is expected to remain sustainable for many years to come.”

Besides being a key coating for steel in the production of galvanized sheets and other forms, zinc is the alloying metal for copper used to make bronze and brass, and a die-casting metal. Zinc’s compounds also are used by the rubber, chemical, paint, agricultural and pharmaceutical industries. 

Tamargo believes that zinc inventories will remain low over the next few years, according to a report in the subscription-only newsletter Nymex Direct, because of years of underinvestment in exploration and development of new mine supplies that only recently has been addressed.


----------



## BREND

BREND said:


> Today I recommend my client to buy zinc at $3700.




Zinc is trading at $3748/$3758 today, position closed.

I recommend my clients to buy Lead today.


----------



## BREND

BREND said:


> Zinc is trading at $3748/$3758 today, position closed.
> 
> I recommend my clients to buy Lead today.




Lead price rises higher today, more money to be made for my clients.


----------



## UMike

Zinc down to $3619. 

up and down like a YoYo.


----------



## vishalt

consolidating before the next upmove imo, those zinc inventories just keep falling


----------



## BREND

UMike said:


> Zinc down to $3619.
> 
> up and down like a YoYo.




Yoyo is good for trading futures.
Ask my clients to buy zinc at $3561 today.


----------



## rederob

Technicals and fundamentals are now lining up well for zinc.
I expect a strong run up in prices as inventories continue to decline at a steady pace: 50k tonne LME inventory "psychological barrier" is getting very, very close.
Although Kagara was recently marked down, my estimation is that it will break $8 within the quarter.  I expect most zinc equities will run strongly towards reporting season.


----------



## Market Cap

rederob said:


> Technicals and fundamentals are now lining up well for zinc.
> I expect a strong run up in prices as inventories continue to decline at a steady pace: 50k tonne LME inventory "psychological barrier" is getting very, very close.
> Although Kagara was recently marked down, my estimation is that it will break $8 within the quarter.  I expect most zinc equities will run strongly towards reporting season.




Agree with you totally, Rederob. The price of zinc has been falling whilst the inventories have been declining. Have been taking this opportunity to accumulate some Zinc stocks such as TZN, AIM, CBH, JML and KZL. I am hoping they will have similar results to the Nickel stocks last year or so.


----------



## GREENS

rederob said:


> Technicals and fundamentals are now lining up well for zinc.
> I expect a strong run up in prices as inventories continue to decline at a steady pace: 50k tonne LME inventory "psychological barrier" is getting very, very close.
> I expect most zinc equities will run strongly towards reporting season.




Yep agree I think that 50K mark will most likely be the physiological barrier, Look at lead ever since it dropped and remained below that mark it has continued to rise to extraordinary heights while inventories have remained flat and cancelled warrants relatively low. Zinc fundamentals (don’t follow the technical side of Zn) are looking very healthy with a drop of around 20,000t of metal over the past 6 months and the rise in cancelled warrants of late back over the 9,000t mark, which is a good sign. The longer Zn continues to defy the fundamentals the bigger the rise when the momentum gets going.


----------



## michael_selway

Market Cap said:


> Agree with you totally, Rederob. The price of zinc has been falling whilst the inventories have been declining. Have been taking this opportunity to accumulate some Zinc stocks such as TZN, AIM, CBH, JML and KZL. I am hoping they will have similar results to the Nickel stocks last year or so.




You forgot ZFX & PEM!

Any reasons why? 

thx

MS


----------



## moses

...and don't forget INL. Its up 14% this morning and rising.


----------



## vishalt

I agree. 

Accumulate Zinifex and you're set for life, I can't wait till this Nyrstar thing, hope it turns into a special dividend for shareholders.


----------



## Love Zn

vishalt said:


> Accumulate Zinifex and you're set for life, I can't wait till this Nyrstar thing, hope it turns into a special dividend for shareholders.




I hope they don't pay a special dividend.  If they did, you would have to see a re-rating down of ZFX with the spin off of the smelters, means less assets and less revenue.

However, if they fund expansion of existing projects and look for other companies to merge/take over, which is what they plan, then the share price shouldn't drop, as they have increased growth.

Zinifex could look at other Zinc companies like KZL, PEM, JML etc or as the rumours have suggested OXR if they were looking to diversify.  And as seen by the share price this week, the market liked the idea.

They might give an increase in this year's dividend instead, since they are already cashed up.


----------



## mick2006

Well guys with the recent drop in LME stocks for Zinc/Lead approaching critically low levels. Zinc now at 16 year lows below 70,000 tonnes and Lead trading at all time price highs. I have been searching for an undiscovered gem that covers both metals, and I certainly have found a little beauty here in Sipa Resources (SRI)

With tight supply starting to drive prices forward, (both metals spot prices up 3.5% overnight) SRI looks good.

Now for a look at Sipa Resources (SRI)


Shares 297,865,090

Share Price 13.5c

Market Cap $40 million

Cash $8.4 million


Reasons to Buy into the SRI Story

- Exposure to Zinc/Lead with fundamental for both metals very strong
- JV's with market heavyweights Newmont/Newcrest/CBH
- Royalty Payments from CBH's upcoming Sulphur Springs Mine($350k on decision to mine and $2 a tonne of ore mined up to $3.7 million)
- Large Cash Reserves
- Upcoming Drilling Results (results from 3 prospects within a couple of weeks)
- Upcoming Resource Upgrade (huge upside due to recent exploration success)
- Free Carried to mine decision on Panorama Exploration Project Targets (CBH)
- Huge exploration upside (will discuss below)
- Already begun re-rating due to upcoming development of Kangaroo Caves Mine (to be treated at Sulphur Springs treatment plant 6km south)
- Very high grade zinc deposit, very robust profit margin
- Strong cashflows once mining begins at Kangaroo Caves/Bernts deposits
- SRI story very similar to that of SMY/THX (follow the SP benefit to THX once the Copernicus Nickel mine was announced)


Now A Closer Look at its Projects

Panorama Exploration Project (CBH 60%,SRI 40%)

The Panorama project contains several JORC classified deposits that will be used as open cut ore feed for the Sulphur Springs treatment plant which will be operational late 2008.

The Panorama Joint Venture covers a mineralized Archean volcanic horizon that extends for 25km south along strike from CBH's planned Panorama base metal mine which is located 160km by road southeast of Port Hedland, in Western Australia's Pilbara region. The project is regarded as one of the best base metal exploration properties in Australia, with a number of known base metal occurrences and the demonstrated potential to host large deposits with >30Mt of mineralization.



Kangaroo Caves

Jorc current resource of 1.7 mt @ 9.8% zinc and 0.6% copper with lead credits

Kangaroo Caves has around the same tonnage as that of the Jaguar Mine for JML(although slightly lower grades), and is the subject of a resource upgrade to include the recent high grade exploration hits, and the potential to substantially increase the resource.

Recent Drilling Results include some spectacular hits

-56m @6.8%zn and 1%cu
- 9m @13.3%zn and 1.9%pb
-15m @11.6%zn and 0.3%cu
-20m @13.7%zn and 0.2%cu
-13m @7.6%zn and 0.8%cu
-6m @12.2%zn and 1.6%cu


Bernts Prospect

Jorc Resource of 0.6 mt @ 7.8% zinc 1.7% pb 0.3%

Another mine ready resource to be use as ore feed to the Sulphur Springs treatment plant.


Also included in the Panorama Exploration Projects are the following very exciting prospects that are in varying stages of exploration

-Jamesons (drilled awaiting assays)
-Breakers (drilled awaiting assays)
-Anaomaly 45 (drilling commencing in september)
-Man O' War (drilling commencing in september)
-Nambucca (drilling commencing in september)
-Roadmaster (drilling commencing in september)


ASHBURTON GOLD PROJECTS

Newcrest Operations Limited (Newcrest) 80% - Sipa 20% carried; including four participation Joint Ventures where Newcrest/Sipa is earning an interest with third parties.

CONCEPT

The Ashburton Gold Province (see figures below) is a relatively newly recognized region of gold mineralisation in which Sipa’s Paraburdoo Gold Project mined the Mount Olympus, Zeus, Peake and Waugh oxide gold deposits between 1998 and 2004, for a total production of about 350,000 ounces of gold.

The Ashburton may be compared to the ‘Carlin Trend’ of Nevada - host to more than 110 million ounces of gold production and resources. This style of mineralisation is characterized by bulk-mineable sediment-hosted gold deposits, with very distinctive types of alteration and trace element signatures, whose location is controlled by combined stratigraphic and structural features.

Sipa’s judgment is that the Ashburton has a very high potential for discovery of very large gold deposits. Clearly if anything approaching a similar potential to the Carlin Trend can be realized in the Ashburton, the commanding tenement position enjoyed by Sipa and its Joint Venture partner Newcrest in the district would be highly advantageous.


Woodline Gold/Base Metals (Newmont 70%/Sipa30%)

The Woodline Project is located near the southeastern margin of the Yilgarn Block about 150 kilometres southeast of Kalgoorlie in Western Australia. The Project covers a large area of Archaean greenstone belt rocks considered by Sipa to be prospective for typically Archaean large gold and basemetals deposits, like the Golden Mile and the Golden Grove deposits respectively. The Archaean greenstones and the Archaean ”” Albany Fraser Orogen boundary within Woodline are generally obscured by thin sand deposits There are few indications of historic prospecting activity within the tenement package with very little previous drilling.

Woodline in part sits astride about 70 kilometres of the same northeast trending structural position as AngloGold Ashanti-Independence Group’s Tropicana Project, which is one of the most exciting new greenfields discoveries in Australia in the last decade. Tropicana is situated about 300 kilometres northeast of Woodline, but a more recently announced prospect ”” Beachcomber ”” where 4 metres at 45.5g/t gold was intercepted in a similar geological setting, is only about 70 kilometres northeast of Woodline. AngloGold Ashanti took out a large ground holding contiguous to, and to the southwest, of Woodline at about the same time as the Independence Group’s announcement of Beachcomber. Tropicana and Beachcomber are both situated on, or close to, the boundary between Archaean-aged rocks and the Proterozoic Albany-Fraser Orogen.

Highlights of the Farm-in and Joint Venture

Newmont will reimburse about $500,000 of Sipa’s exploration expenditure incurred up to December 2006 
Newmont may earn a 70% interest in Sipa’s tenements and a 51% interest in each of the Comet and Image tenement blocks by exploration expenditure of a further $4 million
During the initial period of 18 months Newmont will spend $1 million. In order to remain in the Farm-in and to progress beyond the initial 18 months Newmont will also subscribe for $450,000 worth of Sipa shares, at a 10% premium to market. If the initial period of expenditure is extended, Newmont will continue to subscribe annually for a further $450,000 worth of Sipa shares at a 5% premium to market to remain in the Farm-in
Upon the $4 million expenditure being completed, a 30% Sipa ”” 70% Newmont Joint Venture will be formed and Sipa will then be free carried to commencement of a Bankable Feasibility Study (Discovery JV)
Sipa will be then be carried by Newmont through to production in the Discovery JV by way of loans which will be paid back out of 80% of positive cashflow to Sipa from its share of production, whilst continuing being free carried for exploration outside the Discovery JV
At Decision to Mine Sipa may elect to participate, or sell its 30% share to Newmont
After 3 years, Sipa may elect to sole-risk non-precious metals exploration within the Project
Sipa technical personnel will be seconded to the Project, including Chief Geologist Leigh Bettenay who will be Project Manager
Exploration Completed and Planned by Sipa

Geological mapping and regional and detailed soil sampling by Sipa over the last year has discovered significant outcropping gold mineralisation, with assays as high as 7 g/t gold, associated with shear zones at several localities within the Sipa 100% ground.

More than 20 gossans, which represent oxidised massive sulphides, and which have strong multi element geochemistry indicative of basemetals mineralisation, have been discovered throughout an area of poor outcrop of at least 4 kilometres by 3 kilometres in extent which is surrounded by sand cover. These gossans are associated with strongly altered volcanic and intrusive rocks with widespread oxidised disseminated sulphides.

A helicopter-borne electromagnetic survey, comprising 1450 line kilometres and covering 270 square kilometres centred on the Socrates prospect, was completed in January 2007. Results are awaited.

All new data generated at Woodline is being collated and interpreted and drilling will commence in the first half of 2007.


All in All a very exciting time for SRI with the continuing draw down in Zinc/Lead LME stocks prices are set to run much higher, with SRI to benefit greatly from the Royalty from Sulphur Springs and the development of deposits in the Panorama Exploration Projects.

Also has extremely good short term value given the impending release of drilling results from Kangaroo Caves,Jamesons and Breakers Prospects which have the potential to significantly move the shareprice(as has been proven by recent releases)


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## CanOz

Interesting post Mick....might have to watch this one.

Cheers,


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## mick2006

the best thing about SRI is that it has short/medium/long term potential, 

in the short term you have the release of the drilling results from the 3 prospects and the resource upgrade for Kangaroo Caves.

in the medium term you have the start up of production from Sulphur Springs and the royalty payments on top of that you have the cash flow/profits from treatment of ore from Kangaroo Caves, and some serious exploration on the Panorama JV/CBH, Woodline JV/Newmont, Ashburton JV/Newcrest.

And long term the real possibility of being involved in a major base metal orebody.


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## UMike

SRI did very well to close at 15c.

Got tipped of on this also but was too busy to capitalize on it.


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## michael_selway

UMike said:


> SRI did very well to close at 15c.
> 
> Got tipped of on this also but was too busy to capitalize on it.




Thsi stocks appears to be listed since 1991, but still below its all time high etc

any reasons why?

thx

MS


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## Market Cap

michael_selway said:


> You forgot ZFX & PEM!
> 
> Any reasons why?
> 
> thx
> 
> MS




Sorry for the late reply MS. I don't check ASF every day. It's a sin really, considering it's the best forum out there.

With ZFX & PEM, I've been guilty of chart watching. They are also on my shopping list along with INL. My tactic with Zn stocks is similar to Ni and U stocks. Buy many as your fund allows and watch them rise one after the other as the price of zinc plays catch up with the fundamentals. Some will rise earlier and faster than the other but eventually most will. It worked with Ni and U shares. No reason why it's not going to work with Zn as long as the fundamentals are there.


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## BREND

BREND said:


> Yoyo is good for trading futures.
> Ask my clients to buy zinc at $3561 today.




Ask my client to take profit at $3680 last Friday, earn money from backwardation as well.


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## GREENS

From the Australian today.

"While zinc prices have been falling, the market remains tight, with stocks at just 20 per cent of the five-year average. 

That is expected to help support prices at historically high levels, although the outlook is for prices to soften as new supply comes to market. 

The global market has been in deficit since 2004, but is expected to be close to balance this year, before moving into a small surplus next year. "The long-term direction in zinc prices will be lower from here, but they are still at very solid levels by historical standards," Commonwealth Bank commodity strategist David Moore said."


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## drmb

Anybody else seeing a head and shoulders developing in POZ? From Kitcometals 
Zinc August 21,06:45 
Bid/Ask 1.3746 - 1.3837 
Change -0.0227  -1.62% 
Low/High 1.3746 - 1.4109


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## michael_selway

drmb said:


> Anybody else seeing a head and shoulders developing in POZ? From Kitcometals
> Zinc August 21,06:45
> Bid/Ask 1.3746 - 1.3837
> Change -0.0227  -1.62%
> Low/High 1.3746 - 1.4109





Actually can that also be interpreted as a double bottom, basically it will soon surpass that high?

thx

MS


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## nizar

michael_selway said:


> Actually can that also be interpreted as a double bottom, basically it will soon surpass that high?




Its suprising what you can spot through rose-coloured glasses


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## michael_selway

nizar said:


> Its suprising what you can spot through rose-coloured glasses




Dont tell me you are still bearish on zinc


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## toothfairy

michael_selway said:


> Dont tell me you are still bearish on zinc




Hard for me not to be bearish about Zn. 
Charts look bad (I can't read them, but they seem bad), stockpile increased. Anything else good? Looks like it's NOT the metal for 2007 afterall.


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## toothfairy

Is anyone still interested in Zn? Does anyone still talk about Zn warehouse stockpile etc? Up 4100 tons today. Still looks good?


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## Col Lector

China's strong demand to support future zinc prices - industry insiders  
By Ida Chen

Shanghai. September 10. INTERFAX-CHINA - Zinc prices will remain stable in the remaining months of this year on the back of strong demand from China, industry insiders told Interfax at the 2007 Lead & Zinc Summit - Prices, Futures, Market & Development, held in Shanghai over the weekend. 

"China will remain the largest zinc consumer in the world, and the country's strong demand for zinc will continue to support zinc prices for the remaining months of this year," Wu Xijun, a senior official with Shenzhen-listed Zhongjin Lingnan Co. Ltd., a leading zinc smelter located in Guangdong Province's city of Shaoguan, said. 

"Although there is currently a slight oversupply of zinc [in global and Chinese markets], China's steel industry has recently entered the September peak consumption season, and we therefore expect zinc prices to remain stable in the coming months, with the current price of RMB 25,000 ($3,324.47) per ton acting as a support point. However, we expect to see substantial global oversupply in 2009," Wu said. 

Zhao Cuiqing, deputy director of the China Nonferrous Metals Industry Association's (CNMIA) zinc and lead department commented that the global zinc market is currently driven by increased demand, rather than a raw material shortage, and China's rapid industrialization is will firmly support the demand for zinc in the future. 

"In addition to consumption from the downstream steel industry, zinc is also widely used in China's hardware manufacturing sector, which consumes between 1 million and 1.2 million tons of zinc per year. For example, China's water tap manufacturing sector consumed 240,000 tons of zinc last year alone," Zhao explained. 

Moreover, Zhao predicts that China's zinc production capacity will increase by as much as 500,000 tons this year and by 680,000 tons next year. There is currently 1.25 million tons of zinc smelting capacity under construction in China, with 620,000 tons in the Inner Mongolia Autonomous Region, where various projects are under construction near mines, according to her. 

However, Heng Kun, an analyst from Beijing-based Anxin Securities, held a more bullish view of China's zinc consumption for this year and the next due to China's fast growing economy and low stockpile levels, and commented that China's increased investment in the transportation industry is a major factor contributing to the growth in zinc consumption this year. 

Heng further commented that there was no significant zinc oversupply in the Chinese domestic market this year, and predicted that zinc prices on both the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME) would reach highs of RMB 30,000 ($3,989.36) per ton and $3,500 per ton respectively in the remaining months of this year. 

Recently, capacity growth from global zinc mines has outpaced the growth in zinc smelting capacity. This has led to imported zinc concentrate treatment charges (TCs) reaching record highs of between $370 and $380 per ton. 

Since then, zinc concentrate TCs in the domestic market have increased to current levels of between RMB 8,000 ($1,063.83) per ton and RMB 9,000 ($1,196.81) per ton, due to increased domestic concentrate production. According to the CNMIA, China's fixed assets investment in the lead and zinc mining sector amounted to RMB 26.72 billion ($3.55 billion) in the first six months, up 75.6 percent from the same period last year, significantly above 57.8 percent growth in the smelting sector. 

However, despite high-level TCs encouraging domestic zinc smelters to expand capacity and increase earnings, stricter government policies on pollution control and facility upgrades have limited capacity expansion plans, Zhongjin Lingnan's Wu commented. 

The Chinese government policy to control growth in the zinc and lead industry, released in March this year, has so far led to the elimination of between 300,000 and 400,000 tons of zinc capacity, according to an estimate by Xu Jiancheng, president of Guizhou Xianjin Zinc Co. Ltd., a private zinc smelter located in Guizhou Province's city of Liupanshui, a major zinc producing region in China. 

"More than 20 small-scale zinc plants have been shut down in my city alone this year. Moreover, the reduction in zinc capacity, caused by the shutdown of so many small smelters, has tightened supply in the domestic spot market in a way that was not previously anticipated by market players," Xu said. 

The spot price of 0# zinc ingot lay between RMB 27,800 ($3,696.81) per ton and RMB 27,900 ($3,710.11) per ton in the Yangtze River Nonferrous Metals Market last Friday, noticeably higher than futures market prices. 

The most active November contract closed at RMB 26,405 ($3,511.3) per ton last Friday on the SHFE, while the three-month zinc price on the LME fell to a new low for this year to $2,775 per ton last Friday, down 32.81 percent from the beginning of the year. 

According to various traders at the 2007 Zinc & Lead Summit, both domestic smelters and traders have amassed substantial zinc stockpiles, which they are reluctant to sell in the market.  

"At present, we're looking at tight supply in the domestic Chinese spot market. We are therefore confident of downstream consumption in the future, and contracts offered by our clients have increased recently," a Tianjin-based trader, who asked to remain anonymous, told Interfax at the summit.  

Li Junchao, an analyst from Shanghai-based Xinguolian Futures Brokerage commented that domestic smelters and traders could face losses if they sell refined zinc at current market prices, as the market prices has dropped from when many of them imported zinc concentrate or purchased refined zinc from the market. 

"Many smelters and traders are stockpiling zinc and hedging their bets against a fall in prices in the futures market, rather than selling refined zinc in the spot market," he added. 

Li predicted that despite the downturn in LME prices exerting pressure on strong domestic zinc spot prices, zinc prices will remain at current levels until the first quarter of next year, as the lion's share of new zinc smelting capacity is not due to start full-scale production until the first quarter. However, when full-scale production does commence, domestic prices will fall dramatically. 

According to the China Commodities Weekly published by Macquarie Research last week, an estimated 70,000 tons of zinc has been stockpiled in the domestic market over the past few months, including approximately 40,000 tons in bonded warehouses. 

China produced 276,300 tons of refined zinc in July, and a total of 2,082,800 tons in the first seven months of this year, up 20.9 percent from the same period last year.   

The nation exported 24,198 tons of refined zinc in July, up 83.69 percent from June, and 213,889 tons in the first seven months, lifting 76.4 percent year-on-year. Imports of refined zinc amounted to 16,493 in July, and 85,802 tons in the first seven months, down 55.7 percent from the same period last year.


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## rederob

LME zinc inventories have hit a new cycle low.
Not only that, cancelled warrants are healthy and drawdows are regular.
Zinc prices however have not recognised this point.
That's being blamed on Chinese off-warrant stock apparently being plentiful.
Maybe, but SHFE exchange inventories have also declined each week in the past month.
Does this mean the off-warrant holders are trying to prop up prices by artificially keeping inventories low?
My view is that would not be the case as, unlike copper or nickel, a tonne of zinc is not worth a great deal, and the marginal increases in price would not generate a meaningful profit.
Apparently a lot of new zinc is coming on stream, and the reports suggest this will significantly oversupply the market.  Again, that may be the case, but so far it's not showing up in the numbers.
Zinc is very much a case of "watch this space".
Little wonder Zinifex and a few other producers are meandering in a price range, with no breakout foreseeable just yet.


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## GREENS

rederob said:


> LME zinc inventories have hit a new cycle low.
> Not only that, cancelled warrants are healthy and drawdows are regular.
> Zinc prices however have not recognised this point.
> That's being blamed on Chinese off-warrant stock apparently being plentiful.
> Maybe, but SHFE exchange inventories have also declined each week in the past month.
> Does this mean the off-warrant holders are trying to prop up prices by artificially keeping inventories low?
> My view is that would not be the case as, unlike copper or nickel, a tonne of zinc is not worth a great deal, and the marginal increases in price would not generate a meaningful profit.
> Apparently a lot of new zinc is coming on stream, and the reports suggest this will significantly oversupply the market.  Again, that may be the case, but so far it's not showing up in the numbers.
> Zinc is very much a case of "watch this space".
> Little wonder Zinifex and a few other producers are meandering in a price range, with no breakout foreseeable just yet.





It’s funny Red, when ever we start talking about zinc looking strong fundamentally and thinking it’s just about to push on and get some momentum going, it quite quickly takes a sharp turn to the south. And vice versa, when we start thinking things are turning for the worst (i.e. large inflow of metal and low cancelled warrants) which occurred just a few weeks, things all of a sudden turn around over night and look positive again, with as you said metal inventories hitting a new low. I’ve got an idea maybe we should just down ramp zinc’s prospects, because whenever someone on this thread does, the outlook seems to turn positive. lol. My conclusion is to just keep quite on the metal and let inventories slowly work there way lower. 

I think the main reason for pushing inventories lower at the moment is the fact that there was a fire at one of Xstrata’s zinc-lead mines, causing major disruptions to production. Here we go a quote: “Ongoing supply tightness is affecting the lead market and Swiss-based miner Xstrata  said a fire at its Mount Isa zinc-lead concentrator in Australia will impact about 15,000 to 20,000 tones of lead” (Reuters).  Does not mention disruption to Zn but surely if it is affecting lead production, you would assume it would also be effecting Zn production also. 

In regards to significant production coming online over the coming years, what about the major zinc and lead mines that will also cease production, such as Zinifex’s Century mine. Also Red, I’m sure you know, but just in case, Kagara was stating that their Admiral Bay project looks like it will easily exceed 75Mt, with annual production of 5mt of ore p.a once developed (containing approx 5% Zn). Mine development however is estimated to cost the company between $1-1.5b.


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## Enoch

Has anybody looked at the charts for Zinc on Kitko.

The charts look incredibly bullish.

http://www.kitcometals.com/charts/zinc_historical.html


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## dubiousinfo

The folowing is an extract from yesterday's Australian



> The writing is also on the wall regarding zinc.
> 
> Expect a surplus in that metal of about 250,000 tonnes next year, according to the International Zinc & Lead Study Group.
> 
> Global refined zinc production is expected to grow by 5.9 per cent to 11.32 million tonnes for 2007 and then go up another 7.8 per cent to 12.2 million tonnes in 2008.
> 
> The metal would, however, remain in deficit over the next few months, and a decline on Friday in inventories at the London Metal Exchange sent zinc up 1.8 per cent to $US3125 a tonne.




and this from The Australian today



> UBS analysts said the Nyrstar IPO could "crystallise" value for Zinifex in the near term as zinc prices decreased.
> 
> "While the outlook for zinc has likely diminished due to the introduction of new supply, we think the Nyrstar IPO could crystallise value for Zinifex in the near term and represents a key catalyst for the stock," UBS said in a September 26 client note.




more from the International Lead and Zinc Study Group



> Global demand for refined zinc metal will likely rise by 3% this year to 11.38 million metric tons and climb by 5.1% to 11.96 million next year, according to press release from the International Lead and Zinc Study Group released in early October.
> 
> The group said the demand growth will be "due principally to expected further robust growth" in China of 8.8% in 2007 and 12.1% in 2008.
> 
> Meanwhile, the ILZSG expects global zinc mine production to grow by 7.4% to 11.18 million metric tons in 2007 and by 9.5% in 2008.
> 
> It also said that forecasts supplied by the group's member suggest that there will be a deficit of 47,000 metric tons in the world market for refined zinc this year, but a surplus of just under a quarter of a million metric tons for 2008.






There seems to be a rising concensus that zinc will be in surplus next year.


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## BREND

dubiousinfo said:


> The folowing is an extract from yesterday's Australian
> 
> 
> 
> and this from The Australian today
> 
> 
> 
> more from the International Lead and Zinc Study Group
> 
> 
> 
> 
> 
> There seems to be a rising concensus that zinc will be in surplus next year.




Surplus market does not mean that zinc price will not rise. 
I'm still recommending my customers to buy zinc at $3000 - $3050 level. It has 9% of cancelled warrants in its inventory.


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## Enoch

You could well be right that Zinc inventories will rise next year.

Long term though the future of Zinc looks bullish.

I just read an article in Mineweb dated the 26th Sept 2007 where it was mentioned that the market should be in deficit from about 2010 to 2020 with a very big shortfall in supply developing.

No less than 13 major mines are due to close in the next decade. The new mines being developed will not make up the shortfall.

http://www.mineweb.net/mineweb/view/mineweb/en/page36?oid=37500&sn=Detail


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## BREND

Enoch said:


> You could well be right that Zinc inventories will rise next year.
> 
> Long term though the future of Zinc looks bullish.
> 
> I just read an article in Mineweb dated the 26th Sept 2007 where it was mentioned that the market should be in deficit from about 2010 to 2020 with a very big shortfall in supply developing.
> 
> No less than 13 major mines are due to close in the next decade. The new mines being developed will not make up the shortfall.
> 
> http://www.mineweb.net/mineweb/view/mineweb/en/page36?oid=37500&sn=Detail




But I do not think that zinc will have a lot of upside in the medium term. Once price rises to $3400 level, Chinese merchants will start to deliver their zinc inventory into LME warehouses.


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