Zinc the metal for 2006

[rederob]

So short term LME stocks can rise, but it may drop alot because peopel may think things will change, and whats happening is only "once-off"

MS
This could be a lot of "once-offs".
But not for months on end as it is very unlikely that supply will meet demand over the next six months.
If you trade, stay away from zincs as there is a potential for a lot more sideway action, as other posters note.
If you invest, the likelihood of zinc prices rebounding is pretty good.
Is it guaranteed, tho?

 

[michael_selway]

MS
This could be a lot of "once-offs".
But not for months on end as it is very unlikely that supply will meet demand over the next six months.
If you trade, stay away from zincs as there is a potential for a lot more sideway action, as other posters note.
If you invest, the likelihood of zinc prices rebounding is pretty good.
Is it guaranteed, tho?

Nothings guaranteed lol!

But turn around for lead and Nickel was very sweet yes

thx

MS

 

[Magdoran]

The only reason for being bearish on zinc that has been voiced on this thread is that stockpiles are no longer declining at the rate at which they were for most of 2006. These articles offer an explanation as to why LME stock declines have flattened out in December, and the explanation is based on one-off factors. Nope, see no reason to bearish from reading these articles.

Yes, but do you understand how markets trend? You could extend the same kind of theoretical fundamental argument to crude oil, and rail against the recent price action saying it is contrary to your estimations.

Please do rail all you like. I just love guys like you who try to catch that falling knife buying a falling instrument while the savvy players are selling short. You can argue the finer points till you’re blue in the face.

Brian Price did the same thing for a long time staying short losing $25 odd million dollars during the height of the “dot com” boom, as it turns out later correctly evaluating that the valuations in the market in dot com stocks was way out of wack with the reality… But the timing was wrong.

Markets can reach ridiculous prices either fuelled by unbridled greed, or driven by frenzied fear and panic. Just look at the price of oil for a roller coaster ride, or the NASDAQ from 1998-2000. Try studying those charts for a lesson in market behaviour.

In simple terms price falls when there are more sellers than buyers… You don’t have to divine what every person involved was doing, the price action is quite obvious to many technical analysts.

Don’t get me wrong, I have a very healthy respect for good fundamental analysts, but when markets move, they can often overshoot the mark since they are emotionally driven. You may consider remembering this and wisely take market sentiment and market behaviour into account rather than rigidly applying a theory.

Regards


Magdoran

 

[Freeballinginawetsuit]

Yes, but do you understand how markets trend? You could extend the same kind of theoretical fundamental argument to crude oil, and rail against the recent price action saying it is contrary to your estimations.

Please do rail all you like. I just love guys like you who try to catch that falling knife buying a falling instrument while the savvy players are selling short. You can argue the finer points till you’re blue in the face.

Brian Price did the same thing for a long time staying short losing $25 odd million dollars during the height of the “dot com” boom, as it turns out later correctly evaluating that the valuations in the market in dot com stocks was way out of wack with the reality… But the timing was wrong.

Markets can reach ridiculous prices either fuelled by unbridled greed, or driven by frenzied fear and panic. Just look at the price of oil for a roller coaster ride, or the NASDAQ from 1998-2000. Try studying those charts for a lesson in market behaviour.

In simple terms price falls when there are more sellers than buyers… You don’t have to divine what every person involved was doing, the price action is quite obvious to many technical analysts.

Don’t get me wrong, I have a very healthy respect for good fundamental analysts, but when markets move, they can often overshoot the mark since they are emotionally driven. You may consider remembering this and wisely take market sentiment and market behaviour into account rather than rigidly applying a theory.

Regards


Magdoran

Like comparing chalk to cheese, NASDAQ/POO>Zinc.

 

[millionplusmate]

Well....i like your optimism but if copper does bottom out this year to $3000AU then why would ZINC do any better? Im no expert on Zinc but i am aware that copper prices generally lead other prices, obviously with the exception of precious metals. For me personally, the commodities sector for 2007 is full of risk, especially as there is such huge armament stockpiles already and the US economy is running out of steam...i will come back to this market in maybe 5 years after we start scraping out of the recession which seems quite imminent. keep an eye on debt levels in both US and Australia...someone is going to have to get a spanking and its not normally the big banks...is it???

Bradley

 

[rederob]

Well....i like your optimism but if copper does bottom out this year to $3000AU then why would ZINC do any better? Im no expert on Zinc but i am aware that copper prices generally lead other prices, obviously with the exception of precious metals. For me personally, the commodities sector for 2007 is full of risk, especially as there is such huge armament stockpiles already and the US economy is running out of steam...i will come back to this market in maybe 5 years after we start scraping out of the recession which seems quite imminent. keep an eye on debt levels in both US and Australia...someone is going to have to get a spanking and its not normally the big banks...is it???

Bradley

Copper prices have gone backwards while zinc and lead and tin have increased.
And Nickel yesterday hit yet another record high.
When common assumptions are disconnected, stay connected at your peril.

 

[Magdoran]

Like comparing chalk to cheese, NASDAQ/POO>Zinc.

Not really. Compare the charts and the price action. The metaphor was about markets hitting highs on enthusiasm, and then falling hard on fear, moving to extremes despite the fundamentals.

My point which I thought was abundantly clear was to consider how markets trend, and that the recent price action in a range of markets and commodities has seen some strong moves. Crude oil is a good example of this.

Commodities if you study the charts have a history of spiking up to blow off highs, and then are subject to marked corrections.

Given that the argument that spurred my comment was about inventories, oil I would have thought is a poignant example of how an exhaustive bullish drive up to around $80 fell down to around $50.

Can you see the parallel “Freeball” or do I have to draw you a picture? Why not try looking at some charts yourself, you may learn something.

 

[Rafa]

well said...

 

[BREND]

Delivery of zinc from China merchants continues, I had advised my clients not to go long on zinc. So one of them shorted zinc, and makes money now. Hee!

 

[Freeballinginawetsuit]

Not really. Compare the charts and the price action. The metaphor was about markets hitting highs on enthusiasm, and then falling hard on fear, moving to extremes despite the fundamentals.

My point which I thought was abundantly clear was to consider how markets trend, and that the recent price action in a range of markets and commodities has seen some strong moves. Crude oil is a good example of this.

Commodities if you study the charts have a history of spiking up to blow off highs, and then are subject to marked corrections.

Given that the argument that spurred my comment was about inventories, oil I would have thought is a poignant example of how an exhaustive bullish drive up to around $80 fell down to around $50.
Can you see the parallel “Freeball” or do I have to draw you a picture? Why not try looking at some charts yourself, you may learn something.

Hi Mag,

I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.Nothing goes vertical forever and pullbacks are inevitable.
But for some who hold Zincers longterm for fundamentals, nothing has changed to the underlying dyanamics driving them ATM in my opinion. That is not to say Zinc has not recently fallen through a support level and could go sideways for a while before resuming an uptrend.
Nickles resumed its uptrend after a pause for a while, maybe Zinc just needs a break.
Both are required by the China/India story which you either believe in or dont, if you don't, then why trade them?, their all overpriced ATM.

Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.

 

[chops_a_must]

Hi Mag,

I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.Nothing goes vertical forever and pullbacks are inevitable.
But for some who hold Zincers longterm for fundamentals, nothing has changed to the underlying dyanamics driving them ATM in my opinion. That is not to say Zinc has not recently fallen through a support level and could go sideways for a while before resuming an uptrend.
Nickles resumed its uptrend after a pause for a while, maybe Zinc just needs a break.
Both are required by the China/India story which you either believe in or dont, if you don't, then why trade them?, their all overpriced ATM.

Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.

I don't think anyone is disputing the long term fundamentals of zinc. The original dispute was in regards to the short term outlook.

 

[BREND]

I don't think anyone is disputing the long term fundamentals of zinc. The original dispute was in regards to the short term outlook.

Nobody? Did you not include Goldman Sachs?

The largest zinc manufacturer in China, Torch, recently said they will be supplying 100,000 tons of zinc annually starting from next year. New supply of zinc into market, is this a short term outlook?

I'll not be convinced that the fundamental of zinc has improved, unless I can see that inventory continues to fall. Currently, not convinced yet.

Anyway my client has closed his short position on zinc, earn money happily.

 

[rederob]

Nobody? Did you not include Goldman Sachs?

The largest zinc manufacturer in China, Torch, recently said they will be supplying 100,000 tons of zinc annually starting from next year. New supply of zinc into market, is this a short term outlook?

I'll not be convinced that the fundamental of zinc has improved, unless I can see that inventory continues to fall. Currently, not convinced yet.

Anyway my client has closed his short position on zinc, earn money happily.

BREND
Torch is not a miner/producer of zinc, but a refiner. The company needs to ramp up refined metal output to meet demand, which this article notes is not going to be easy:
http://resources.alibaba.com/article/29608/Chinese_zinc_maker_targets_output_increase.htm

 

[BREND]

BREND
Torch is not a miner/producer of zinc, but a refiner. The company needs to ramp up refined metal output to meet demand, which this article notes is not going to be easy:
http://resources.alibaba.com/article/29608/Chinese_zinc_maker_targets_output_increase.htm

Thanks, so you remain bullish on zinc?

 

[Magdoran]

Hi Mag,

I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.Nothing goes vertical forever and pullbacks are inevitable.
But for some who hold Zincers longterm for fundamentals, nothing has changed to the underlying dyanamics driving them ATM in my opinion. That is not to say Zinc has not recently fallen through a support level and could go sideways for a while before resuming an uptrend.
Nickles resumed its uptrend after a pause for a while, maybe Zinc just needs a break.
Both are required by the China/India story which you either believe in or dont, if you don't, then why trade them?, their all overpriced ATM.

Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.

Aha! So you’re the “carp” in this pond huh?

You’re kind of a contradictory, oDD kind of chap aren’t you?

If as you claim you are aware of “Blowoffs” and how markets trend, why the silly off the cuff “chalk and cheese” comment in the first place when you selectively quoted my post in a somewhat dismissive fashion?

Then you contradict yourself apparently embracing the sentiment of my original comment on how commodities trend in your last post:

I do look at charts and are well aware of 'Blowoffs', as I trade to profit targets.

Then you contradict yourself AGAIN by attributing a judgemental attitude to me whilst being judgemental. (Talk about projecting psychosis):

Don't be so quick to assume or judge little fella, there is more than one goldfish in the bowl.

I’m sure you’re a trainee psychologists dream for a case study! It’s like a set of those Russian dolls, endless enigma in enigma, but the most amusing thing of all is you just don’t see it, do you “Freeball”?

You’re a funny guy “Freeball”, calling me “little fella” cracks me up. A mate of mine in my youth used to call me “the little guy” which was kind of a joke since I’m 6ft 3… so I’ll take your label as a term of endearment.


Mag

 

[constable]

Aha! So you’re the “carp” in this pond huh?

You’re kind of a contradictory, oDD kind of chap aren’t you?

If as you claim you are aware of “Blowoffs” and how markets trend, why the silly off the cuff “chalk and cheese” comment in the first place when you selectively quoted my post in a somewhat dismissive fashion?

Then you contradict yourself apparently embracing the sentiment of my original comment on how commodities trend in your last post:
Then you contradict yourself AGAIN by attributing a judgemental attitude to me whilst being judgemental. (Talk about projecting psychosis):

I’m sure you’re a trainee psychologists dream for a case study! It’s like a set of those Russian dolls, endless enigma in enigma, but the most amusing thing of all is you just don’t see it, do you “Freeball”?

You’re a funny guy “Freeball”, calling me “little fella” cracks me up. A mate of mine in my youth used to call me “the little guy” which was kind of a joke since I’m 6ft 3… so I’ll take your label as a term of endearment.


Mag

hey mag sure you dont want to replace tarrant as collingwood's fullforward? big fella!

 

[Magdoran]

hey mag sure you dont want to replace tarrant as collingwood's fullforward? big fella!

Hello constable,


Hahaha… I used to play Aussie rules once upon a time, but had no accuracy kicking, so I wasn’t a good choice for the offence… but I was really fast so I ended up playing in defensive positions.

The coach used to call me his “secret weapon” giving me missions to mangle the opposition’s front line. It was great fun in a scramble to get the ball and spirit it away to our star players who could actually kick goals, leaving a “trail of destruction” in the process (kind of exaggerating here, I wasn’t that wanton)!

But thanks for the offer constable! – I’m a bit rusty now.


Regards


Magdoran

 

[rederob]

Mag etc, you are straying off topic!
But as the heading was for "2006" I reckon it's done and dusted.
Do we start a new thread, Joe Blow?
On topic:
In the last 2 months of 2006, China accounted for almost half of its annual zinc exports.
Needless to say, the flood of zinc into the marketplace has affected LME trends.
It will be very difficult for China to maintain the export trend as it was predicated on changes to the tax regime which made rapid divestment of metal more profitable than holding on inventory.
So we are now left with a zinc "overhang" that needs to work itself off.
It's early days, and only a supreme optimist would think that we will soon re-tread the rapid pace of zinc drawdowns that were the theme of most of 2006.
However, LME drawdowns of small but noticeable quantity have recently emerged. They may be indicative of a change for the better. But a waiting game is best played for now.
Here's a question for those that short the markets:
If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?

 

[chops_a_must]

Here's a question for those that short the markets:
If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?

I don't short, but on probabilities you would have to say copper, even though drawdowns have become large. Zinc could go either way, that is why I'm staying away for the minute, but nickel... it's almost a one way bet.

 

[BREND]

Mag etc, you are straying off topic!
But as the heading was for "2006" I reckon it's done and dusted.
Do we start a new thread, Joe Blow?
On topic:
In the last 2 months of 2006, China accounted for almost half of its annual zinc exports.
Needless to say, the flood of zinc into the marketplace has affected LME trends.
It will be very difficult for China to maintain the export trend as it was predicated on changes to the tax regime which made rapid divestment of metal more profitable than holding on inventory.
So we are now left with a zinc "overhang" that needs to work itself off.
It's early days, and only a supreme optimist would think that we will soon re-tread the rapid pace of zinc drawdowns that were the theme of most of 2006.
However, LME drawdowns of small but noticeable quantity have recently emerged. They may be indicative of a change for the better. But a waiting game is best played for now.
Here's a question for those that short the markets:
If you were to short one of the base metals, and you could only choose out of zinc, copper and nickel, which one do you pick on Monday?

I'll not short any.

Zinc inventory had gone down recently, seems like China merchants have stopped exporting zinc. If this reversal is sustainable, we might see zinc price rebounding again. Previously I had heard that consumers are willing to buy zinc at $4000. With current zinc price way below $4000 now, I would assume that demand for physical zinc is much higher now in Asia ex China.

Copper inventory had also gone down recently, accompanied with huge rise in cancel warrants. The signal that copper price will continue to fall is less obvious now. There is a strong support level at $5400 (for LME pricing). Seems like China has been buying up copper stocks lately.

To short nickel is damn risky. Nickel has a backwardation of about $2000. To make money by shorting nickel, nickel price has to fall fast and hard in order to cover the huge backwardation. And any news of production disruption will support nickel price again. Xtratrda might be going on strike in Feb 07, too risky to short nickel.

Right now my strategy is to look for opportunity to buy tin and aluminum on dips.