# Bearish on zinc



## BREND (25 October 2007)

*Fundametal:*

1. Zinc production has been rising faster than usage, with the market moving in a surplus of 6.6kt in Aug from a deficit of 7.9kt in Jul. The deficit was much smaller in the Jan-Aug period (28kt) compared with the year-ago period (311kt). Global zinc inventories remained unchanged in Aug from the previous month at 3.8 weeks and compared with 4 weeks at the end of 2006.

2. Australia's Zinifex started the financial year on a strong note with total zinc concentrate output at 153,985 mt in the September quarter, 13% higher than the 135,682 mt produced during the same period last year, Tony Barnes, Zinifex's acting CEO, said Thursday. 

He added that total output increase was due to an increase in production at the Century mine in Queensland. Zinc concentrate production at Century was133,419 mt for the September quarter, 16% higher year on year. No major maintenance shutdown at the mine helped keep operations steady and led to an increase in production. Last year during the September quarter the mine was shut for maintenance, affecting production.

Huge rise in supply of zinc is expected for year 2008.

*Technical:*

Zinc price had breached the critical $3000 support level effectively, more downside is expected in the medium term.

*Trading strategy:*

If FOMC cuts interest rate on 31 Oct, this will create a strong rebound on the zinc price; I'll be interested to short zinc at $3000 if it reaches that level again.

Zinc chart looks weak, it can be found in my blog if you search for "basemetal-trading" in the internet. A picture tells a thousand words.

_Disclaimer: This is not a recommendation, invest in your own risk_


----------



## Nick Radge (25 October 2007)

Its been that way for months...


----------



## dj_420 (25 October 2007)

What platform do you use to be able to go long/short on zinc?

I have CMC markets and cannot find it in the CFD and Futures on there. Cheers


----------



## BREND (26 October 2007)

dj_420 said:


> What platform do you use to be able to go long/short on zinc?
> 
> I have CMC markets and cannot find it in the CFD and Futures on there. Cheers




The right way to short zinc is of course using LME zinc; its trading platform (select system) is usually not available to retail customers.


----------



## ithatheekret (13 November 2007)

Looking forward , with new supplies coming on line , the zinc price looks as though it will continue it's decline ........ unless smelting production rises to another level , there doesn't look like much that could get in the way of the spiral .

Lead on the otherhand , looks stable , with demand and supply , still competing strongly .


----------



## BREND (13 November 2007)

Yes, agree, zinc price is likely to fall further next year.

As for Lead, long term is good; but for short term, I would like to see inventory falling at a regular basis first. I think its too early to be bullish on lead now. 

Currently I'm looking to buy copper, maybe at $6000 level.. And also short crude oil.


----------



## juw177 (13 November 2007)

TZN is one zinc stock that has been having a run lately despite falling zinc prices. I am not sure of any others.


----------

