Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Here's my prefered stock exposure
TZN Terramin
I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file
To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out
michael_selway
22nd-March-2006, 11:30 PM
Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Here's my prefered stock exposure
TZN Terramin
I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file
To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out
Hi comsec no forecasts EPS out for this atm, but do u think u can estimate forecast EPS for 2006, 2007 and 2008 based on your research u can share with us?
thx
MS
Joe Blow
22nd-March-2006, 11:45 PM
Is this thread about zinc or TZN?
If it is about zinc then I hope we are going to see some discussion on that topic. If it is about TZN then I'm not quite sure why this thread was created when there is already a TZN thread.
clowboy
22nd-March-2006, 11:54 PM
Seems to me it is about tzn.
happy with zinc setting new highs again, for a while it had me worried :(
michael_selway
23rd-March-2006, 12:38 AM
Seems to me it is about tzn.
happy with zinc setting new highs again, for a while it had me worried :(
Yeah same
the recent price correction for zinc was scary, but fundamentally its stillstrong, when u look at LME supplies
Upbeat metals hover near new record highs
--------------------------------------------------------------------------------
Major base metals were holding close to new highs on Wednesday, with some profit-taking seen, although analysts said the industrial metals complex looks comfortable at current high levels.
Benchmark metal copper was trading at $5 115 a tonne by 10:40 GMT, up from Tuesday's London close of $5 105 on the London Metal Exchange (LME).
The metal, which is used in construction and electronics, hit a record high of $5 186 on Tuesday. Zinc, used in galvanising to protect steel from corrosion, hit a new record of $2 525 on Wednesday, up from $2,510.
In precious metals, silver hit a fresh 22-year peak of $10,59 an ounce, as speculators ploughed more money into the market after US regulators approved an exchange-traded fund.
"People sold copper yesterday at the highs, and but have been quick to buy back short positions and are looking to go long again this morning," one dealer said.
"We are seeing buying, not only from the speculators, but also from consumers. Fund buying is undoubtedly the main driver, but there is underlying demand from industry," he said.
Consumers have become more comfortable with copper at the previously unthinkable levels between $4 500 to $5 000, and price rises have been passed down through the chain, traders said.
But some sounded a warning note, as market sentiment has become more realistic after a month-long corrective phase halted what had become an almost vertical ascent in major metals in early-February.
"All in all, it is hard to feel too confident about copper's recent bout of strength and the move above $5 100 runs the risk of turning out to be a false break-out," William Adams, an analyst for BaseMetals.com, said in his Tuesday evening note.
With the tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and household use, zinc prices have risen more than 30% since the end of last year.
LME zinc stocks fell another 3 000 t on Wednesday to exactly 300 000 t, the lowest since July 2001. At the end of last year stocks stood at 393 600 t.
Zinc's strong run has lifted it to a premium over aluminium for the first time in about 13 years, analysts said.
Aluminium, a lightweight metal used widely in consumer durables, traded at $2 498, against a previous close of $2 500. Earlier this year aluminium traded as high as $2 678, the highest for 17-1/2 years.
YOUNG_TRADER
23rd-March-2006, 09:58 AM
Ok I started a thread here yesterday and it has been deleted, please don't delete this thread, as we have one for Gold, Oil and Uranium we should have one for Zinc as it will be the base metal of 2006.
Stocks which should be covered by this thread,
AIM JML UCL TZN
I already have a comparative analysis for JML vs TZN am updating to include AIM and UCL, when I'm done, someone tell me how to upload the excel sheet as an inserted image or something, Cheers
YOUNG_TRADER
23rd-March-2006, 10:00 AM
Also note, stocks like KZL PEM and ZFX have to a large extent run and are covered by any analysts so no need to re-cover them, rather can use some of the assumptions made on these stocks to assist in 'our' thoughts on the four stocks I listed
YOUNG_TRADER
23rd-March-2006, 10:05 AM
The main reason why Zinc will be the standout metal for 2006 and probably into 2007 is due to the large deficits in supply, ie demand has been and will continue to outstrip supply thus causing the very low LME stock piles to drop even lower,
Zinc Rises to Record After Stockpiles Slump, Curbing Supply
March 22 (Bloomberg) -- Zinc rose to a record in London for a second consecutive day after stockpiles shrank, curbing supply of the metal used to protect steel from corrosion.
Inventory tracked by the London Metal Exchange fell 2,700 tons, or 0.9 percent, to 300,000 tons, the LME said today. Inventory has slumped 48 percent in the past year. Consumers may have to rely on stockpiles to fill a forecast production shortfall.
``Zinc stockpiles keep coming down,'' Andrew Silver, a trader at Natexis Commodity Markets in London, said in an interview. ``Consumers are still buying at high prices.''
wayneL
23rd-March-2006, 10:07 AM
Folks,
There were two Zinc threads going so I've merged the two.
Cheers
YOUNG_TRADER
23rd-March-2006, 10:12 AM
Ahh here's my lost thread, Wayne did you move the 2nd one I started as well?
I want it to be about Zinc Stocks, with some small commentary on Zinc, can't it be where the others are (ie where it was) with the Gold Stocks thread, Oil Stocks thread Uranium stocks, Solar stocks etc etc?
wayneL
23rd-March-2006, 10:22 AM
YT,
It gets a bit confusing if there are two current threads going. Most of the Zinc stocks have their own threads, or if there isn't a thread on a particular stock, you can open one.
But Zinc in general should be all in one place...Because it's currently very topical, if you know what I mean. Otherwise the analysis becomes divided, or one thread will whither and die anyway.
It's just to keep things tidy :)
Cheers
YOUNG_TRADER
23rd-March-2006, 10:30 AM
Fair enough, can you tell me how to upload an excel sheet on this msg so I can show my comparative valuations for JML vs TZN?
wayneL
23rd-March-2006, 10:43 AM
YT,
Just use the "manage attachements" button below the "reply to thread" screen.
Just like attaching an image.
http://www.aussiestockforums.com/forums/faq.php?faq=vb_read_and_post#faq_vb_attachment_exp lain
YOUNG_TRADER
23rd-March-2006, 10:51 AM
Did it work?
YOUNG_TRADER
23rd-March-2006, 01:26 PM
Here's an updated sheet I did before,
Comments,
JML: Is also reliant on Copper for its revenue, due to the fact that later on in 2006 we will see huge surpluses for Copper the price will not hold at current levels for too long. However may see a bidding war for Takeover by OXR and CSM, Project is fully funded, unhedged and construction is well underway, JML represents the lowest risk of the four, with good long term returns in store.
AIM: Project looks the goods, but requires huge levels of finance and may not be able to come on line until mid 2008, stock has also run strong from 7c - 14c
TZN: Angas is as they a done deal, it will come on line and funding required is only $35m, has Macquarie and Sempra in its stables so funding not an issue, Angas alone should underwrite a value of $1.35, Real blue sky comes from North African project which has an in ground value of $3.5b
UCLThe largest project by far, requiring the most funding by far and in Iran which makes it the riskiest by far!
UPDATE 4-Zinc and copper hit record highs, funds buying
By Martin Hayes
LONDON, March 23 (Reuters) - Investment fund buying re-emerged on the London Metal Exchange (LME) on Thursday, lifting copper and zinc to record highs.
Copper, the LME's benchmark metal, hit a new peak of $5,250, bolstered by supply worries and a mudslide at a major mine in Asia, while tin broke $8,000 to a 10-month high.
Zinc prices also hit a record of $2,585 a tonne on Thursday as warehouse stockpiles extended a decline that can only continue, analysts said.
Zinc, used mostly in galvanising to protect against corrosion, has climbed over 80 percent in the past year while LME stocks have dwindled to 297,375 tonnes, the lowest since July 1991, with more declines inevitable.
"Zinc's price performance this year is justified by the fundamentals. Essentially, this is because the market cannot be in anything other than a large deficit this year and it will be in a large deficit next year as well," Stephen Briggs, analyst at investment bank SGCIB, said.
On the LME, the world's largest non-ferrous exchange, zinc <MZN3> closed at $2,571 in the open-outcry session, up two percent from the Wednesday close of $2,520.
Given tight global supply of zinc concentrate and strong demand for zinc-coated steel for construction, vehicles and other uses, more metal will be taken out of stores.
At the end of last year LME stocks stood at 393,600 tonnes, while of the current total some 137,075 tonnes, or 46 percent, is registered is destined for removal.
"The market started to go into deficit later than the other base metals as the structure of the industry, which is more competitive, meant that cutbacks happened later," Briggs said.
Zinc's strong run has lifted it to a premium over aluminium for the first time in about 13 years.
Buying by investment funds -- the key drivers behind the commodity market boom -- points to more price gains.
YOUNG_TRADER
13th-April-2006, 12:16 AM
Zinc where's it at? ? ?
$3,000 US/t you say?
Zinc where it headed? ? ? ? ?
$4,000 us/t by July 06
Are you crazy Young Trader? ? ? ? ?
I sure am!!!! Crazy about Zinc!
brerwallabi
13th-April-2006, 12:33 AM
Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Hello, where have you been please carry on buying laughing all the way to the bank. I am so pleased that all of a sudden that Generation whatever have discovered Zinc. I always tried to keep it a secret but somehow the word must have got out.
michael_selway
13th-April-2006, 12:54 AM
Zinc where's it at? ? ?
$3,000 US/t you say?
Zinc where it headed? ? ? ? ?
$4,000 us/t by July 06
Are you crazy Young Trader? ? ? ? ?
I sure am!!!! Crazy about Zinc!
Do u know what, i think Zinc LME stocks will go down to 0 by Oct 2006
I know that in mid 2007 supply will exceed demand as forecast by many, however its too late!
In which case yes it will go to $4,000 us/t, but not only that, since its so low, it may turn into a huge bubble, looking at $10,000+ us/t which may last a few months before it crashes back to normal levels like maybe $4,000 us/t?
Time to put your house on zinc stocks u think? or wait a bit longer first and see if the LME supplies can reach closer to 0?
Just a thought ;)
thx
MS
professor_frink
13th-April-2006, 08:30 AM
Do u know what, i think Zinc LME stocks will go down to 0 by Oct 2006
I know that in mid 2007 supply will exceed demand as forecast by many, however its too late!
In which case yes it will go to $4,000 us/t, but not only that, since its so low, it may turn into a huge bubble, looking at $10,000+ us/t which may last a few months before it crashes back to normal levels like maybe $4,000 us/t?
Time to put your house on zinc stocks u think? or wait a bit longer first and see if the LME supplies can reach closer to 0?
Just a thought ;)
thx
MS
Hey MS, seen as though your a fundie you could probably answer this- what would be fair value on ZFX at 10,00 us/t?
michael_selway
13th-April-2006, 09:01 AM
Hey MS, seen as though your a fundie you could probably answer this- what would be fair value on ZFX at 10,00 us/t?
hm if assuming $10,000+ is only a shorterm thing (a few months)...ZFX can probabaly reach a peak of $25-30. However if it is a longer term (6-12months) thing $35-40. It really depends on the supply increase response in 2007 as analysts have forecasted
hm if assuming $10,000+ is only a shorterm thing (a few months)...ZFX can probabaly reach a peak of $25-30. However if it is a longer term (6-12months) thing $35-40. It really depends on the supply increase response in 2007 as analysts have forecasted
yes.
they also have a way of extracting from tailings as well as a mine.
I'm no fundie but thats all I know plus they are technically strong,I traded a breakout on volume.Nothing magical.
YOUNG_TRADER
14th-April-2006, 07:17 PM
Intec CLAIMS to have found a solution to recovering huge amounts of zinc from tailing dam stock piles, yet it hasn't been proven on a fully operational basis,
Worley Parsons are doing the BFS for them, I'm pretty sure the pilot plant worked but still there is risk, ie recovery, floatation, if the chemicals don't work properly etc, if it works though it would be worth well over $1 BILLION from memory, but thats if it works,
My opinion, buy companies that are in production or will be very soon,
My favourites are CBH, TZN, JML, I don't hold CBH yet, will wait a bit as a lot of issues @ 26c recently should put lid, I hold JML and TZN
nizar
14th-April-2006, 07:37 PM
My favourites are KZL and CBH
Kipp
14th-April-2006, 08:25 PM
Heya Folks,
could someone explain the LME stockpiling system or direct em to a link that does. Obviously from the Zinc and Nickel charts it is intimately (and inversely) linked to prices. But surely the LME only controls stockpiles for the for the U.K. so it doesn't have control over GLOBAL commodity prices?
And Michael- I enjoy your posts but aren't you getting a bit carried away with commsec and their forecasts? How accurate are they really? I mean the MAp EPS forecast was something pathetic like 15c for 2006... Are they any other brokers/websites offering free forecast services?
michael_selway
15th-April-2006, 03:41 PM
Heya Folks,
could someone explain the LME stockpiling system or direct em to a link that does. Obviously from the Zinc and Nickel charts it is intimately (and inversely) linked to prices. But surely the LME only controls stockpiles for the for the U.K. so it doesn't have control over GLOBAL commodity prices?
And Michael- I enjoy your posts but aren't you getting a bit carried away with commsec and their forecasts? How accurate are they really? I mean the MAp EPS forecast was something pathetic like 15c for 2006... Are they any other brokers/websites offering free forecast services?
LME is kind of like a warehouse for global base metal storage, usualy excess supply over demand will be added and when demand exceeds supply, it will be shipped out ("cancelled" first). The other places where they store basemetals is Nymex (Comex) and Shanghai although they only hold Copper and Aluminium below are the links
Well in regards to MAP, MIG, BBI having decreasing EPS (high forward PEs), i think someone mentioned to me before that its due to "devaluations" of their assets rather decreasing cashflows problems for these infrastruture stocks.
Comsec forecasts are just consensus forecasts of the many brokers out there. Whether they evenuate is another story but they are legitamite forecasts. Just have to make sure they are updated.
You can read free broker news below (broker news archive), which have foreacasts and target prices yes.
LME is kind of like a warehouse for global base metal storage, usualy excess supply over demand will be added and when demand exceeds supply, it will be shipped out ("cancelled" first). The other places where they store basemetals is Nymex (Comex) and Shanghai although they only hold Copper and Aluminium below are the links
Thanks for that, and the links.
yogi-in-oz
21st-April-2006, 03:02 PM
:)
Hi folks,
As requested Michael, we started on a long analysis
on zinc prices, but not having any recent historical
data, it proved too complex ..... :)
..... suffice to say, we expect more of the same from
zinc prices, until about the December 2007 solstice
18-24122007.
-----
For most traders, it is more PRACTICAL to analyze the
individual zinc stocks. While the zinc price may be
the fundamental driver for the industry as a whole,
not all those stocks will participate at the same time,
due to a wide variation in their own natural cycles.
-----
In fact, we can line up all the zinc stocks mentioned in
this thread, around the 360 degree dial and come up
with a likely sequence, WHEN they will react to the
same cycle one-by-one, as each aspect progresses,
around the dial.
For example, right now, we can see that JML should be
triggered on 12-13072006, with ZFX a few days later,
on 17072006 ..... :)
Then, for the same cycle, the order goes AIM, INL, KZL,
TZN, CBH and UCL, all on different dates ..... :)
-----
..... and on ZFX ..... so, you think it's high now???
Come back in December 2006 for another look,
but more importantly will be the run up into
December 2007 ..... should be HUGE !~!
If we get time on this end, this could be a good
project ..... "tag-the-zinc-stock" ..... lol
have a great weekend all
yogi
:)
professor_frink
21st-April-2006, 03:45 PM
:)
Hi folks,
As requested Michael, we started on a long analysis
on zinc prices, but not having any recent historical
data, it proved too complex ..... :)
..... suffice to say, we expect more of the same from
zinc prices, until about the December 2007 solstice
18-24122007.
-----
For most traders, it is more PRACTICAL to analyze the
individual zinc stocks. While the zinc price may be
the fundamental driver for the industry as a whole,
not all those stocks will participate at the same time,
due to a wide variation in their own natural cycles.
-----
In fact, we can line up all the zinc stocks mentioned in
this thread, around the 360 degree dial and come up
with a likely sequence, WHEN they will react to the
same cycle one-by-one, as each aspect progresses,
around the dial.
For example, right now, we can see that JML should be
triggered on 12-13072006, with ZFX a few days later,
on 17072006 ..... :)
Then, for the same cycle, the order goes AIM, INL, KZL,
TZN, CBH and UCL, all on different dates ..... :)
-----
..... and on ZFX ..... so, you think it's high now???
Come back in December 2006 for another look,
but more importantly will be the run up into
December 2007 ..... should be HUGE !~!
If we get time on this end, this could be a good
project ..... "tag-the-zinc-stock" ..... lol
have a great weekend all
yogi
:)
Hi yogi, when you say that a stock should be "triggered" on a certain date, what exactly do you mean?
michael_selway
21st-April-2006, 05:30 PM
:)
Hi folks,
As requested Michael, we started on a long analysis
on zinc prices, but not having any recent historical
data, it proved too complex ..... :)
..... suffice to say, we expect more of the same from
zinc prices, until about the December 2007 solstice
18-24122007.
..... and on ZFX ..... so, you think it's high now???
Come back in December 2006 for another look,
but more importantly will be the run up into
December 2007 ..... should be HUGE !~!
If we get time on this end, this could be a good
project ..... "tag-the-zinc-stock" ..... lol
have a great weekend all
yogi
:)
Hi Yogi thanks for that
Just wondering when you say "should be HUGE" is that according to the "stars", your own personal view, or just the view based on LME supplies are decreasing in general. Thanks
Also does it say about PEM and KZL?
MS
yogi-in-oz
21st-April-2006, 05:47 PM
:)
Hi Frinkle,
Gann got into Sepharial's head, about a century ago and
came up with the theory, that every market has its own
individual time cycle signature or "natural vibration" ... :)
Being a very clever pom, our astrologer Sepharial also
obliged us, by writing extensively about his observations.
Such vibrations are really points on the 360 degree dial,
where a particular market (or stock) will see a change in
traders' sentiment, as a planet transits such points OR
makes a common geometric aspect to those point(s).
Very simple stuff, but also quite effective in confirming
our technical analysis, in most markets.
have a great weekend
yogi
:)
yogi-in-oz
21st-April-2006, 06:19 PM
:)
Hi MS,
..... no consideration given to LME stockpiles, at all.
That "HUGE" was referring to ZFX astroanalysis, as not only
will it be enjoying some very favourable sentiment, in its
own right ..... but, we also see one ruler of zinc making a
rendezvous with the ruler of all things underground, at late
degrees in the sign, so there will likely be a significant
"expansion" in zinc, including the price .....
..... that may end quite abruptly, after the December 2007
solstice ..... :)
-----
On KZL example ..... that same time cycle should be positive
around, 28072006 and PEM very soon after, on 28-31072006
and should also show positive sentiment ... ???
Given the positive outlook for zinc stocks, we will probably
work slowly through each zinc stock, posting key dates and
supporting analysis, as we go ..... :)
happy days
yogi
:)
michael_selway
21st-April-2006, 07:07 PM
:)
Hi MS,
..... no consideration given to LME stockpiles, at all.
That "HUGE" was referring to ZFX astroanalysis, as not only
will it be enjoying some very favourable sentiment, in its
own right ..... but, we also see one ruler of zinc making a
rendezvous with the ruler of all things underground, at late
degrees in the sign, so there will likely be a significant
"expansion" in zinc, including the price .....
..... that may end quite abruptly, after the December 2007
solstice ..... :)
-----
On KZL example ..... that same time cycle should be positive
around, 28072006 and PEM very soon after, on 28-31072006
and should also show positive sentiment ... ???
Given the positive outlook for zinc stocks, we will probably
work slowly through each zinc stock, posting key dates and
supporting analysis, as we go ..... :)
happy days
yogi
:)
wow amazing thanks, i see soemthing huge in ZFX also by year end (mainly to do with zinc prices, and also all that cashflow possible M&A) :)
thx
MS
professor_frink
22nd-April-2006, 09:25 AM
zinc made a big move overnight. Should be interesting to see what the zinc stocks get up to on monday
rederob
22nd-April-2006, 09:39 AM
Pro FrinK
Toss up a chart of nickel and compare the 2 over the last month.
Money ebbs and flows, and while zinc will get a fair share, the new kid on the block is also looking good.
professor_frink
22nd-April-2006, 10:24 AM
no worries mate. I've put the 5 year for both up as well. Enjoy your weekend. :D
rederob
22nd-April-2006, 10:48 AM
Pro Fink
Putting the above into perspective:
Nickel rose by $750 overnight.
As zinc is presently trading at $3300/tonne, nickels' dollar price rise was equivalent to adding 22% to zinc overnight.
Let me put it in a longer term perspective: In the last month nickel prices have risen by over $4450/tonne.
In other words the total price of zinc would need to rise over $1000 just to match the price rise of nickel in the last month alone.
Now I am in love with zinc this year, but the markets require perspective.
professor_frink
22nd-April-2006, 05:08 PM
Pro Fink
Putting the above into perspective:
Nickel rose by $750 overnight.
As zinc is presently trading at $3300/tonne, nickels' dollar price rise was equivalent to adding 22% to zinc overnight.
Let me put it in a longer term perspective: In the last month nickel prices have risen by over $4450/tonne.
In other words the total price of zinc would need to rise over $1000 just to match the price rise of nickel in the last month alone.
Now I am in love with zinc this year, but the markets require perspective.
interesting point you make there. I actually think nickel can be used as an example to how the rest of the base metals could move down the track, this just theory based on looking at charts, but if you look at nickel, it started it's run before most of the other metals did. After nickel had it's big parabolic move, it stayed in a trading range until it's recent breakout- didn't completely collapse, just paused, until now. If all of the other base metals perform in a similar way over the next few years, this commodities bull will be going on for a long time yet!
Am I saying we are in a supercycle? not necessarily, but it makes me more confident that we aren't even close to the top yet.
At the moment I'm in love with zinc, not because of any personal preference for the metal, it's just that out of all the stocks that have options on them, zfx is by far the easiest to trade, and is moving the quickest!!
p.s yogi, thanks for the reply, i completely missed your post this morning, i was very hungover :D
rederob
23rd-April-2006, 09:59 AM
If all of the other base metals perform in a similar way over the next few years, this commodities bull will be going on for a long time yet!
qed
nizar
23rd-April-2006, 10:57 AM
rederob
the pie chart u attached of your current holdings, is that by: $ invested or current market value ?
RichKid
23rd-April-2006, 11:34 AM
FYI: There was an interview today with the Zinifex boss by Alan Kohler on InsideBusiness on TV, discussed the Zinc price.
rederob
23rd-April-2006, 11:44 AM
rederob
the pie chart u attached of your current holdings, is that by: $ invested or current market value ?
nizar
It's my Comsec CHESS holdings by present value - taken direct from the Position Summary" in Comsec's website.
I still hold some HIN statements on TLS, BSL SUN and AMP from investments made in late 90s.
nizar
23rd-April-2006, 12:08 PM
FYI: There was an interview today with the Zinifex boss by Alan Kohler on InsideBusiness on TV, discussed the Zinc price.
What did he say?
Let me guess, the price will go up more? LOL
Halba
23rd-April-2006, 12:49 PM
it'll be interesting to see ZFX quarterly report this week..hopefully no big dramas...they really need to expand their production if they can
michael_selway
23rd-April-2006, 01:13 PM
Zinifex rides wave of commodities boom
Date : 23/04/2006
Reporter: Alan Kohler
ALAN KOHLER: When the zinc miner, Zinifex was floated out of the wreckage of Pasminco two years ago it had few friends and dubious prospects. Memories were still fresh about how panicking banks scuttled the one-time great mining house which was then wallowing under $3 billion of debt, a disastrous hedge-play and an abundant supply of a rather unfashionable metal. Well, as you can see from this graph, Zinifex is the champion surfer of the commodities wave, easily outpacing even the extraordinary performances of its peers, like BHP Billiton thanks to its relatively pure zinc play. I spoke to Zinifex boss Greg Gailey who's been at the helm through the highs and the lows.
Greig Gailey, Zinifex floated from the ashes of Pasminco a couple of years ago for less than $2, it's now more than $11, capitalised at $5.5 billion. I guess its ironic, isn't it, that Pasminco went broke betting that the zinc price would do exactly what it's done, it was just too early.
GREIG GAILEY, CEO, ZINIFEX: Pasminco's problems were complex and it failed for a number of reasons. However, Zinifex has had a spectacular performance since it listed in April of 2004.
ALAN KOHLER: I guess you're pretty happy you decided to stick around? You were appointed about a month before the company collapsed, I think?
GREIG GAILEY, CEO, ZINIFEX: That's correct.
ALAN KOHLER: It must have been tempting when the collapse occurred to bail out.
GREIG GAILEY, CEO, ZINIFEX: It was. However the three years, Alan, in all honesty, was the most fantastic career experience one could ever have. I mean to take a public company through administration which not many CEO's quite frankly would like to do, and I don't blame them for that, but that was an enormous learning experience to restructure it in the way that I was able to do and to bring it back to market as Zinifex and then see the spectacular success is just an amazing experience and it's a true tribute to all of the people in the company that worked so hard to create what Zinifex is today.
ALAN KOHLER: Now obviously as you say, no-one predicted what would happen to the zinc price, but do you think what's happening to the zinc price now is rational?
GREIG GAILEY, CEO, ZINIFEX: Absolutely in the sense that, really the seeds of where we are today were sown in the early 2000's. It was pretty miserable time in zinc. Nobody made any money, companies like Pasminco failed, and as a result of that, nobody did any exploration, nobody was interested in developing zinc mines and what we're seeing today is the fruits of that, i.e. there's an acute shortage of raw material.
ALAN KOHLER: So do you believe that this current price can now be sustained?
GREIG GAILEY, CEO, ZINIFEX: Well if you look at the cure, which is more raw material coming to market, it takes today somewhere in the order of three to five years to develop a new zinc mine. We have a very large deposit in Queensland called Dugald River, which is about 50 million tonnes, so it's half the size of Century, could be a very substantial mine. We're currently in the phase of doing a pre-feasibility study but even if we fast track that project through, i.e. we said feasibility then immediately into development, it would not be in the market before 2010 or 2011.
ALAN KOHLER: I've been reading some analyst reports which say that zinc, unlike other minerals, tend to be small mines, small deposits, more easily developed than others, and that there are - this was Merrill Lynch - has identified 234 potential zinc mines in the world. I mean it is likely isn't it that there will be much more of a response to the price in terms of supply, than you can come up with?
GREIG GAILEY, CEO, ZINIFEX: Well there certainly will be a response to price but we believe it will be somewhat slow in coming and even though there are a lot of zinc mines, many of them are very small, and not only that - the other issue that plays in here - because there was no exploration carried out during this period, many of the deposits that are being looked at today for development like Dugald River, have actually been around a long time and the reason they haven't been developed before today is that either they have technical challenges or they have high costs, and that has issues I think for what the long-term sustainable price is going forward.
ALAN KOHLER: And what about the demand outlook? Is there any push back from customers about the trebling of the cost of, for example, of galvanising iron?
GREIG GAILEY, CEO, ZINIFEX: Well, in the issue...zinc's primary use is galvanising, rust protection, and in the terms of a sheet of galvanised steel it's a very minor cost component. So in terms of what drives the demand for galvanised steel it's really the price of iron ore not the price of zinc. I mean your options in galvanising is you move to something like aluminium which is not cheap either. You paint it, which has high costs in terms of maintenance or you simply let it rust. And in many cases - are you going to buy a car that's not galvanised?
ALAN KOHLER: It's a relatively simple business in some ways I guess, I mean, you dig the stuff out, you sell it and it's driven by the price, so what sort of price do you think is implied - zinc price is implied by the current Zinifex share price and is it, is that kind of sustainable?
GREIG GAILEY, CEO, ZINIFEX: Well, I think the issue you're asking is hard to answer because what price is required to justify the current share price depends on not one year but going out a whole series of years. It's what is the price in the next three years but also what is the long-term price. And I can't answer that question in terms of detail because it would require all sorts of different assumptions. But clearly the market determines what our stock price is and if you look at our other criteria like PE multiples, we actually trade at a PE multiple well below most of our peers.
ALAN KOHLER: That's right, which is remarkable in a sense. Given the rise in Zinifex share price over the past couple of years which has been far greater than BHP Billiton's and Rio Tinto's yet your PE is much below their's, isn't it?
GREIG GAILEY, CEO, ZINIFEX: I think you have to look at where we came from. There's no question that when Zinifex was created and put into the market, the ghost of Pasminco hung over the company, and certainly at the time of the float, it was the lack of support by Australian institutional investors which really led the offer to go into the market at such a low price and I believe we had a period to prove that we could run this company successfully, and I believe we've done that, and I think that's a component also in the uplift in the share price.
ALAN KOHLER: Now Zinifex, I think, is virtually debt free, if not entirely.
GREIG GAILEY, CEO, ZINIFEX: We are more than debt free, we have cash in the bank.
ALAN KOHLER: Right, and what's your free cash flow generation at the moment?
GREIG GAILEY, CEO, ZINIFEX: We don't put actual numbers in the market but our free cash flow at the moment is very healthy. We're generating a lot of cash.
ALAN KOHLER: So what are you going to do with it all?
GREIG GAILEY, CEO, ZINIFEX: Well, we've got a pretty clearly stated policy and that is if we can invest it to grow the business for the shareholders and to their benefit then we will do that. If we're unable to do that because we can't find the right opportunities we will simply give the money back to shareholders.
ALAN KOHLER: At what point will you make that decision, that you need to give it back?
GREIG GAILEY, CEO, ZINIFEX: That decision's made every half. We declared a dividend at the last half and I'm sure when the accounts close for the June period, the board will come to a view as to what the cash surplus position is, whether it has opportunities to use that cash and if it doesn't it will do as it has stated, it will return that cash to shareholders.
ALAN KOHLER: Are there sufficient opportunities, do you think, in zinc?
GREIG GAILEY, CEO, ZINIFEX: There are clearly opportunities to explore and we're busily doing that, we're investing $75 million over 5 years to explore in and around the properties we have and in joint ventures with others. But when it comes to acquisitions there's no doubt that the market for resource companies today is pretty well priced.
ALAN KOHLER: $75 million's probably a few hours cash flow.
GREIG GAILEY, CEO, ZINIFEX: Possibly, but $75 million is still a significant investment in exploration and exploration itself is an interative process in the sense that you spend some money, you learn a bit more and you spend a bit more, and there are clearly limits on how much one wants to spend very quickly.
ALAN KOHLER: I suppose the question is whether you're considering diversifying outside of zinc?
GREIG GAILEY, CEO, ZINIFEX: Again the strategy is clearly stated. We like the metals we're in. We also like other base metals which are related to our business. As well as zinc we produce lead, copper, silver, gold and in any of those materials we would feel very comfortable.
ALAN KOHLER: Right. So each of those materials, because you're known, obviously, as a zinc company primarily, and the other metals you mentioned are minor. So can you see a time in the future when one or more of those metals equal zinc in terms of Zinifex's portfolio?
GREIG GAILEY, CEO, ZINIFEX: I wouldn't like to look forward in that sense because I think what the future holds is not necessarily certain, but it's also worth mentioning that we are the world's third-largest silver refiner, so we're a big producer of final silver as well - doesn't contribute a huge amount to our profit, because we pay for what we bring in to Port Pirie, but we are a major player in the silver market.
michael_selway
23rd-April-2006, 01:29 PM
ALAN KOHLER: Can you see possible takeovers as well as developing mines?
GREIG GAILEY, CEO, ZINIFEX: Acquisitions are something that are clearly of interest to us, there's no doubt about that. If we could find an acquisition at the right price which added value we'd be very happy to do that. And I have no doubt that just as many merchant banks pass through my office proffering companies to me, they pass through other people's offices proffering my company to them.
ALAN KOHLER: Do you think we're in sort of a boom mentality at the moment? Do you think that there is sort of a euphoria spreading across the mining industry which is affecting everybody, the way they think about it?
GREIG GAILEY, CEO, ZINIFEX: I think we're in a rather remarkable period. If you look at the history of the resource business, the last period that resembled this was the economic miracle that occurred after the war with Japan and there's no doubt in my mind that China is undergoing a massive economic change which is sort of a decade-long phenomenon. Now the Chinese may fall in potholes along the 10 years, but there is no doubt that they are on a trajectory for a long period of economic growth.
ALAN KOHLER: And obviously that post-war miracle and period you spoke about led to the nickel boom of the late 60's and the 1970 crash. What sort of danger do you think there is of that happening again?
GREIG GAILEY, CEO, ZINIFEX: I think the cycle here's longer. I think one of the more interesting things is what it means in terms of the long-term commodity prices. The industry is experiencing cost increases, which is the black side of the current resources boom, and the industry is looking, generally speaking, at developing more difficult deposits in less hospitable places, and I think all of that has ramifications for long-term sustainable prices.
ALAN KOHLER: We'll have to leave it there but thanks very much, Greig Gailey.
it'll be interesting to see ZFX quarterly report this week..hopefully no big dramas...they really need to expand their production if they can
Zinifex Hobart Smelter appears (looking from the outside) to be roasting concentrates falt out again after having the larger of the two roasters shut for upgrading. The crane is still up though but it appears that the roasters are running. They've relined one of the roasters and also the associated waste heat boiler. This enables the roaster to run a bit faster. Since roasting was the bottleneck in the plant, this will increase overall production by a modest amount for zinc and by-products.
With the move to use 70% Century concentrates in the Hobart Smelter, there will be increased sulphur content (so in theory at least more sulphuric acid produced and also more heat, hence the roaster reline) and a lower production of paragoethite (the primary waste product which is shipped to Port Pirie). The reduction in paragoethite production will mean they are able to reprocess more than is produced thus gradually clearing the stockpiles (at Port Pirie) of unprocessed material.
Just for general info on what the company is doing. :2twocents
professor_frink
23rd-April-2006, 03:09 PM
qed
sorry mate you've lost me with that comment????????
rederob
23rd-April-2006, 04:09 PM
sorry mate you've lost me with that comment????????
qed
Latin abbreviation:
quod erat demonstrandum (which was to be demonstrated)
... usually after we have proved that the case exists....
professor_frink
23rd-April-2006, 04:35 PM
qed
Latin abbreviation:
quod erat demonstrandum (which was to be demonstrated)
... usually after we have proved that the case exists....
gotcha.
Making fun of me and I didn't even know it! :D
YOUNG_TRADER
26th-April-2006, 07:51 PM
Starting a new thread on a metal that is way overdue for coverage on this forum, Zinc!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Here's my prefered stock exposure
TZN Terramin
I have done a valution for it as I can't find one from any of the brokers, if someone can tell me how to I will try and upload it, its in an Excel file
To give you an idea I think the stock will be worth $1.40 + once the Angas feasibility study comes out
Started this thread on the 22nd March, TZN was 70c then, today only 1 month later it nearly tested $2,
Take a look at CBH Zinc Bulls! $1+ stock
nizar
26th-April-2006, 10:12 PM
Take a look at CBH Zinc Bulls! $1+ stock
Agree, this stock very undervalued
Market sentiment is still negative, but BFS for Sulfur Springs due soon and for sure this will boost the sp
YOUNG_TRADER
27th-April-2006, 09:40 AM
Re CBH see the thread,
Be nice to get some feedback,
Zinc trades at all-time high on London Metal Exchange
E-mail | Print | | Disable live quotes Last Update: 7:03 AM ET Apr 26, 2006
SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants.
Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals.
Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories.
Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions.
Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005.
First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades.
Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust.
The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007.
"The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement.
The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.
noirua
27th-April-2006, 10:18 AM
Re CBH see the thread,
Be nice to get some feedback,
Zinc trades at all-time high on London Metal Exchange
E-mail | Print | | Disable live quotes Last Update: 7:03 AM ET Apr 26, 2006
SINGAPORE (MarketWatch) -- London Metal Exchange three-month zinc hit a record of $3,405 a metric ton in Asia Wednesday, building on overnight gains on the back of several bullish comments by industry participants.
Zinc has risen by 77% since the beginning of the year and is analysts' top base metals pick, due to firm fundamentals.
Zinc continues to be supported by an expected deficit on the back of strong demand growth from China, coupled with a tight concentrate market and falling inventories.
Global miner BHP Billiton (BHP) said Wednesday it will reduce output at its Cannington silver-lead-zinc mine in Australia's Queensland state to shore up ground conditions.
Peru's copper-zinc mine Compania Minera Antamina SA said Tuesday its zinc production will be slightly lower in 2006 than it was in 2005.
First quarter zinc output at Antamina was down 56% on the same period last year due to lower ore grades.
Meanwhile demand for the metal, used in galvanized steel, is expected to be strong, as the demand for steel continues to be robust.
The International Iron and Steel Institute said late Tuesday that it expects total world steel demand to grow 7.3% to 1,087 million metric tons in 2006 and 5.8% to 1,150 million tons in 2007.
"The largest factor in this growth is the influence of China. Even with a slowing of Chinese steel demand, double digit growth in China is still predicted at 13% for 2006 and 12.1% in 2007," the industry group said in a statement.
The institute forecasts steel use in China will grow to 356 million metric tons this year, accounting for 32% of total steel demand in 2006.
I wonder whether this boom in mining stocks and metals is nearing its peak? Maybe not yet, 'though in the end it will surely crash as it always has before, will it not??
nizar
27th-April-2006, 11:33 AM
Historically, All commodity bull runs have lasted btw 15 and 23 years
So yes, as before, it will become crashing down, but not for a long time yet
YOUNG_TRADER
27th-April-2006, 11:34 PM
Resource boom behind zinc mine's reopening
Thursday, 27/04/2006
The booming base metals price has led to the reopening of an old zinc mine in the Kimberley region of Western Australia.
Canadian company Teck Cominco will reopen its underground mine near Fitzroy Crossing because of a recent hike in zinc prices on the London Metal Exchange.
Teck Cominco exploration general manager Wayne Spilsbury says zinc is performing well after a three-year price glut.
"We were watching the stocks of zinc in the LME warehouses and making sure those numbers were coming down before we made a decision to reopen. There is now an under supply, but that has only turned up in the last year or so."
In South Australia, junior zinc explorer Terramin Australia has also benefited.
Terramin's shares have surged more than 44 cents to $1.84 after it discovered rich zinc deposits near Port Augusta.
nizar
29th-April-2006, 02:42 PM
UBS forecasts
Cash zinc prices, up nearly 80% since the beginning of the year on the LME, are seen at 165.4c/lb, or $3,649/ton for 2006, up 65% on the January forecast and at 185c/lb or $4,081/ton for 2007, up 95% on the previous outlook.
"Improving fundamentals are no better reflected than in the highly visible inventory levels on the LME. Inventories of refined zinc in LME warehouses currently total 266,000 tons compared with 394,000 tons at the end of 2005," UBS said.
Around two-thirds of these stocks are held in LME warehouses in New Orleans, which were damaged in the wake of Hurricane Katrina, UBS added. The cash nickel forecast is up 15% at 761.2c/lb, or $16,794/ton for 2006 and up 40% for 2007 on the previous forecast at 765c/lb, or $16,878/ton.
Nizar
UBS needs to work on its maths.
Copper is already 80cents higher than their 2006 forecast.
So we need copper to retrace a full dollar and remain at that level from tomorrow until the end of the year for UBS to be close to right.
Flying pigs have got more appeal.
RichKid
1st-May-2006, 02:15 PM
A view of some activity before the last price spike: http://www.marketthoughts.com/images/20051120/chart03.gif
And current prices: http://www.sucden.co.uk/sucden-bin/charts/chart.asp?com=zinc
YOUNG_TRADER
2nd-May-2006, 01:17 AM
Zinc, Copper and Silver Market Fundamentals
Metal Price Performance in US Dollars (as at February 17, 2006)
---------------------------------------------------------------------
Metal Historic Historic 25 Recent Historic Recent Price
25 Year Year High Price Increase
High Bottom Increase from Cycle
(pre this From Cycle Bottom
cycle) Bottoms
---------- ---------- ----------- ---------- ----------- ------------
Copper $1.52 $0.62 $2.32 245% 375%
---------- ---------- ----------- ---------- ----------- ------------
Nickel $8.42 $1.76 $8.05 478% 457%
---------- ---------- ----------- ---------- ----------- ------------
Aluminum $1.08 $0.47 $1.18 230% 251%
---------- ---------- ----------- ---------- ----------- ------------
Lead $0.48 $0.17 $0.64 282% 376%
---------- ---------- ----------- ---------- ----------- ------------
Zinc $0.91 $0.34 $1.08 267% 317%
---------- ---------- ----------- ---------- ----------- ------------
Source: Yukon Zinc Corporation
April 26, 2006 (Kitco): Zinc $1.53, Copper $3.13, Silver $12.72.
Zinc consumers are reducing inventories because refined production cannot keep pace with consumption. Smelter and refinery capacity are approximately equal with demand, but a deficit is being created because mines are not supplying sufficient concentrate to the smelters, which is causing smelters to produce below capacity. The underlying problem is that zinc reserves are being depleted faster than new production is coming on line. To compound this situation, there is a lack of new discoveries, and very few projects that are expected to begin production. Sierra Mojada is among the few projects that could potentially come on line in the next few years
The following table indicates zinc projects that are currently in development, as well as mines that are expected to be restarted in the near future:
New Mines Start Zinc Lead Capex Source
Production tpa tpa
----------------- ----------- ----------- -------- ------- -----------
Lanping, China Late 2005?? 140,000
----------------- ----------- ----------- -------- ------- -----------
Dairi, Indonesia Late 90,000 50,000 US$118M Brook Hunt
2006/07 Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Jaguar, Australia Early 2007 25,000 Brook Hunt
Nov 2005----------------- ----------- ----------- -------- ------- -----------
Duck Pond, NFLD Late 2006 34,500 Macquarie
Canada
----------------- ----------- ----------- -------- ------- -----------
San Cristobal, Early 2007? 182,500 85,000 US600M Apex silver
Bolivia
----------------- ----------- ----------- -------- ------- -----------
Duddar, Pakistan Late 2007 100,000 Macquarie
----------------- ----------- ----------- -------- ------- -----------
Cerro Lindo, Peru Mid 2007 140,000 20,000 Brook Hunt
Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Perkoa, Burkina Late 2007 60,000 $US72.5 Mining
Faso News, Dec
2005----------------- ----------- ----------- -------- ------- -----------
Wolverine, Canada Q3 2007 44,000 4,000
----------------- ----------- ----------- -------- ------- -----------
Aljustrel, 2007? 78,000 18,000 Brook Hunt
Portugal Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Subtotal 2006 and 754,000 177,000
2007
----------------- ----------- ----------- -------- ------- -----------
Development
Projects
----------------- ----------- ----------- -------- ------- -----------
Mehdiabad, Iran 2010 450,000 110,000 Brook Hunt
Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Penasequito, Mid 2008 75,000 40,000 Brook Hunt
Mexico Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Khandiza, 2008? 45,000 17,000 Brook Hunt
Uzbekistan Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Expansions,
Restarts,
Reductions
----------------- ----------- ----------- -------- ------- -----------
Endeavor, Mine 85,000? 52,000? Brook Hunt
Australia failure Nov 2005
CBH Resources Oct 2005
and
restart----------------- ----------- ----------- -------- ------- -----------
Balmat, USA Mid 2006 35 mths to $20M Brook Hunt
ramp up to Nov 2005
54,000
----------------- ----------- ----------- -------- ------- -----------
Lennard Shelf, 18 mths 180,000 TeckCominco
Australia after Jan 2006
restart
decision
----------------- ----------- ----------- -------- ------- -----------
Sa Dena Hess, 9 to 24 40,000 TeckCominco
Canada mths after Jan 2006
a decision
----------------- ----------- ----------- -------- ------- -----------
Antamina, Peru Est.120,000 TeckCominco
vs Jan 2006
184,000 in
2005
----------------- ----------- ----------- -------- ------- -----------
Langlois, Canada Mid 2007 54,000 Brook Hunt
Nov 2005
----------------- ----------- ----------- -------- ------- -----------
Black Mountain- 2005 Increase
Deeps expansion, from
Namibia 28,200 to
45,000
----------------- ----------- ----------- -------- ------- -----------
Source: Yukon Zinc Corporation
These additions are expected to be partially or totally offset by mine closures due to reserve depletion.
Andrew Roebuck of TeckCominco has forecasted that mine closures will remove 1.4 million tonnes of zinc production by 2011. The Lennard Shelf deposit in Australia, with historic annual production of 180,000 tonnes of zinc, is expected to be restarted, but at this production rate, it is expected to have only 18 months of reserves left.
As indicated in the above table, the estimated amount of possible new production and expansions, ignoring the possible closure of the 160,000 tonne McArthur River mine in Australia's Northern Territory, is projected to be about 1.3 million tonnes, which is about the amount needed to replace the projected closures.
The supply deficit is currently at least 450,000 tonnes per annum and new consumption grew last year by more than 600,000 tonnes. The deficit will be with us for the foreseeable future, until new zinc deposits are discovered or existing zinc production is expanded. In some cases, new or expanded production would likely not be justified for low grade deposits until the price of zinc increases further.
The price for zinc has improved dramatically from its low of $0.335 per pound on November 7, 2001 to $1.53 per pound on April 26, 2006. The inventory of zinc traded on the LME has fluctuated from a low of 240,000 tonnes in May 2001 to a high of 790,000 tonnes in April of 2004, with a subsequent decline to the present 260,000 tonnes.
The copper and silver supply demand fundamentals are very similar to the above documentation for zinc. Demand exceeds supply and mine production is in deficit to both demand and metal production, hence the depletion of inventories of all three metals. All three metals have a deficit between consumption and mine production and a lack of new discovery sufficient to satisfy projected increase in consumption. Zinc, copper and silver prices are expected to continue to increase and remain strong due to increasing demand and inadequate supply. This situation will likely persist until sufficient new production can be discovered, developed and put into production to balance the markets of each of the metals. The process to develop a new mine, from discovery through production, generally takes 10 to 15 years. Metalline has been exploring and developing Sierra Mojada for 10 years.
Metals rank in the order of tonnes consumed: iron, aluminum, copper and zinc. Silver ranks among the most important of the precious metals and has a strong, increasing, industrial demand.
Zinc, copper and silver are among the most important metals to the world's industrial economy JML or CBH anyone?
michael_selway
2nd-May-2006, 09:57 AM
Zinc, Copper and Silver Market Fundamentals
Metals rank in the order of tonnes consumed: iron, aluminum, copper and zinc. Silver ranks among the most important of the precious metals and has a strong, increasing, industrial demand.
Zinc, copper and silver are among the most important metals to the world's industrial economy JML or CBH anyone?
When does JMl start producton again and how much? when will it be in full production and how much?
CBH is good although not in full production to September 06?
thx
MS
Zinc - Outlook for 2006
8. Global usage of refined zinc metal is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
9. It is anticipated that global zinc mine output will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
10. A further 4.3% increase in world refined zinc metal production to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
11. Chinese net imports of zinc metal are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
12. Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. Current forecasts indicate a shortfall of 437,000 tonnes.
zinc seems to be stuck in the 1.45-1.55 range for the last 2 weeks or so...
when is it going to start moving again?
michael_selway
3rd-May-2006, 11:49 PM
zinc seems to be stuck in the 1.45-1.55 range for the last 2 weeks or so...
when is it going to start moving again?
Nizar you have to look at "Live Warrants" thats why. "Cancelled" means its already been sold.
http://www.lme.co.uk/dataprices_daily_metal.asp
basically LME Zinc supplies have been increasing in recent weeks ive noticed its 172450 tonnes atm
thx
MS
RichKid
3rd-May-2006, 11:53 PM
Nizar you have to look at "Live Warrants" thats why. "Cancelled" means its already been sold.
http://www.lme.co.uk/dataprices_daily_metal.asp
basically LME Zinc supplies have been increasing in recent weeks ive noticed its 172450 tonnes atm
thx
MS
More Zinc prices and inventory levels here, plus other metals, Zn seems to be ranging below about 1.50/lb atm: http://www.kitcometals.com/
michael_selway
4th-May-2006, 12:05 AM
More Zinc prices and inventory levels here, plus other metals, Zn seems to be ranging below about 1.50/lb atm: http://www.kitcometals.com/
Hi thx yeah i knwo about the kitco site
London Metal Exchange Warehouse Stocks(May 02)
Metal Tonnes in Storage Change from previous day
Aluminum 740,225 -1400
Copper 117,550 -175
Nickel 26,928 -66
Lead 99,600 -200
Zinc 258,650 -2050
That 258650 can be quite misleading because 86200 is already 'sold" ("cancelled"). So you should also follow the change in "live warrants" daily which may give a better picture
http://www.lme.co.uk/dataprices_daily_metal.asp
thx
MS
michael_selway
4th-May-2006, 06:58 PM
http://www.lme.co.uk/dataprices_daily_metal.asp
03/05/06 = 173425 tonnes
02/05/06 = 172450 tonnes
Hi rederob, do u know where the increase in Zinc Live Warrant is coming from? is it new orleans for the above?
thx
MS
rederob
4th-May-2006, 07:58 PM
MS
2,125 re-warranted at New Orleans.
A total 70,475t of LME-registered metal at this US port were damaged by the hurricanes that ravaged the city last year. All of it was cancelled, the LME saying it needed to be cleaned before re-warranting. Deliveries into warehouse here so far this year have totalled 45,300t, suggesting this process will continue for a while yet.
nizar
4th-May-2006, 08:49 PM
nice to see zinc continue its uptrend... was in 1.45-1.50 for the last few weeks
now 1.53, up 3%.... lets see if it stays that way when NY opens..
YOUNG_TRADER
12th-May-2006, 11:04 AM
Almost @ $4,000t = $1.80
michael_selway
22nd-May-2006, 08:49 PM
:)
Hi folks,
As requested Michael, we started on a long analysis
on zinc prices, but not having any recent historical
data, it proved too complex ..... :)
..... suffice to say, we expect more of the same from
zinc prices, until about the December 2007 solstice
18-24122007.
-----
For most traders, it is more PRACTICAL to analyze the
individual zinc stocks. While the zinc price may be
the fundamental driver for the industry as a whole,
not all those stocks will participate at the same time,
due to a wide variation in their own natural cycles.
-----
In fact, we can line up all the zinc stocks mentioned in
this thread, around the 360 degree dial and come up
with a likely sequence, WHEN they will react to the
same cycle one-by-one, as each aspect progresses,
around the dial.
For example, right now, we can see that JML should be
triggered on 12-13072006, with ZFX a few days later,
on 17072006 ..... :)
Then, for the same cycle, the order goes AIM, INL, KZL,
TZN, CBH and UCL, all on different dates ..... :)
-----
..... and on ZFX ..... so, you think it's high now???
Come back in December 2006 for another look,
but more importantly will be the run up into
December 2007 ..... should be HUGE !~!
If we get time on this end, this could be a good
project ..... "tag-the-zinc-stock" ..... lol
have a great weekend all
yogi
:)
Hi when u say "December 2007 solstice 18-24122007" do u mean?
- Huge crash of ZFX
- Huge crash for zinc stocks
- Huge crash for All Ords
- Huge crash for all world markets esp DOW?
Can you pleasee see if the "stars' have changed since?
thx
MS
specman
22nd-May-2006, 10:24 PM
When are we going to see zinc get to critical mass?LME supplies are drying up and mining supply won't catch up with demand till at least 2008.
Would anyone care to speculate on what will happen to the price of zinc when LME supplies approach zero?
Unlike copper,zinc cannot be substituted with a cheaper alternative and users will pay any price because it comprises only a small percentage of the finished product.
nizar
22nd-May-2006, 10:49 PM
Unlike copper,zinc cannot be substituted with a cheaper alternative and users will pay any price because it comprises only a small percentage of the finished product.
Agree
in november supplies were 450ktonnes
now they are at 250ktonnes
so ~200k per 6 months is the usage rate
in around 6 months, LME supplies very close to zero and remember may be much sooner if more cyclones hit the actual storage warehouses which are in New Orleans
I still think by the end of the year zinc spot price will be >$2
We are nowhere near the peak... :2twocents
michael_selway
22nd-May-2006, 11:25 PM
Agree
in november supplies were 450ktonnes
now they are at 250ktonnes
so ~200k per 6 months is the usage rate
in around 6 months, LME supplies very close to zero and remember may be much sooner if more cyclones hit the actual storage warehouses which are in New Orleans
I still think by the end of the year zinc spot price will be >$2
We are nowhere near the peak... :2twocents
yeah no where near peak imo, but also important to note that as zinc prises move higher demand may slow, so LME Supplies may drop slower. Also Live Warrants (as cancelled warrants implies sold already) still stands at 172k atm and for a while now, so it may hit a snag there?
http://www.lme.co.uk/dataprices_daily_metal.asp
Btw for Copper...
After ending 2005 with an essentially balanced market (small deficit of 64,000 t), the copper market is expected to show a modest surplus in 2006 of about 240,000 t. According to ICSG estimates, a growth in usage will result in a production surplus in 2007 of only about 55,000 t.
8. Global usage of refined zinc metal is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
9. It is anticipated that global zinc mine output will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
10. A further 4.3% increase in world refined zinc metal production to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
11. Chinese net imports of zinc metal are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
12. Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. Current forecasts indicate a shortfall of 437,000 tonnes
Another interesting thing, during the last basemetal correction, zinc went down from 1.08 to 0.89 so
(0.89/1.08)*1.71 = 1.40 = New level of support?
If it is, it appears that its the same sellers selling? So the majority of fundies are still holding?
thx
MS
specman
22nd-May-2006, 11:38 PM
Would the New Orleans damaged zinc being gradually cleaned and put back onto live warrants explain why it has remained static at 172k?
When that is depleted I would expect supplies on the live warrants to decline as well or is that flawed logic?
michael_selway
22nd-May-2006, 11:48 PM
Would the New Orleans damaged zinc being gradually cleaned and put back onto live warrants explain why it has remained static at 172k?
When that is depleted I would expect supplies on the live warrants to decline as well or is that flawed logic?
Thats what i would presume as well, but cant be for certain. However i remember "rederob' saying that there was about 40k to be added back to "live warrants" after being cleaned
But on a day to day basis, u cant really say unless u have access like rederob to the official LME site, which gives u breakdowns of the "ins", "outs", "cancelled" and from which location. He might be able to give us an update ;)
Hi when u say "December 2007 solstice 18-24122007" do u mean?
- Huge crash of ZFX
- Huge crash for zinc stocks
- Huge crash for All Ords
- Huge crash for all world markets esp DOW?
Can you pleasee see if the "stars' have changed since?
thx
MS
:)
Hi Michael,
Nothing changes about the planetary cycles, except
our interpretation, sometimes ..... :)
As for ZFX ..... simply, the expected strong rally going
into the December 2007 solstice, should come to an end
and we'll probably see trading go flat, then pullback.
Every year, there's a few positive ZFX annual cycles,
around 14-15 April, 17-18 August and 16-17 December.
..... for 2006 only however, we'll probably see ZFX go flat-
to-down, from around 16122006 - 08012007 ..... that same
negative cycle for ZFX should also repeat, around mid-July 2007.
happy days
yogi
:)
michael_selway
23rd-May-2006, 11:32 PM
:)
Hi Michael,
Nothing changes about the planetary cycles, except
our interpretation, sometimes ..... :)
As for ZFX ..... simply, the expected strong rally going
into the December 2007 solstice, should come to an end
and we'll probably see trading go flat, then pullback.
Every year, there's a few positive ZFX annual cycles,
around 14-15 April, 17-18 August and 16-17 December.
..... for 2006 only however, we'll probably see ZFX go flat-
to-down, from around 16122006 - 08012007 ..... that same
negative cycle for ZFX should also repeat, around mid-July 2007.
happy days
yogi
:)
Thx Yogi and YT
Btw found it
http://www.basemetals.com/stocks.aspx (click on magnifying glass)
Now we can track daily movements/breakdown in LME Live Warrants!
LME Stocks go "out" from Cancelled Warrants. LME Stocks go "in" to Live Warrants. Live Warrants when "sold" become Cancelled Warrants.
yeah it appears New Orleans 850 tonnes were added to Live Warrants on 22/05/06
thx
MS
nizar
24th-May-2006, 12:01 AM
thanks MS
much easier to keep track of zinc supplies now
all the best
nizar
24th-May-2006, 12:34 AM
Crude-oil futures rallied to their highest level in a week, with a forecast of an active 2006 hurricane season acting as a tailwind. Crude for July delivery was last up $1.09 at $71.05 a barrel. See Futures Movers.
If New Orleans gets hit again, imagine what that would do to the price of zinc?
Zinc should even go up upon speculation of this... most of the supplies are concentrated there....
Exactly and huh guess what, hurricane season should impact around Sept/Oct!
Look out those who don't hold Zincies!
YOUNG_TRADER
27th-May-2006, 09:32 AM
Zinc stock levels are starting to fall rapidly,
Stocks down to 242k with 'on Warrant' Stocks down to 168k, dropping by 1kt a day so fundamentals still remain very very strong!
rederob
27th-May-2006, 10:05 AM
Zinc stock levels are starting to fall rapidly,
Stocks down to 242k with 'on Warrant' Stocks down to 168k, dropping by 1kt a day so fundamentals still remain very very strong!
YT
Don't get overexcited.
Zinc drawdown rates have actually been reducing at most locations except New Orleans over recent weeks.
Although the picture for zinc is not poor, the recent fundamentals for copper and nickel suggest these metals in the near term will find strong, favourable action.
michael_selway
27th-May-2006, 03:07 PM
Zinc stock levels are starting to fall rapidly,
Stocks down to 242k with 'on Warrant' Stocks down to 168k, dropping by 1kt a day so fundamentals still remain very very strong!
yeah was wondering why price increased so much. Zinc live warrants below 170k!
Besides 'new orleans" looks like quite a few were bought from "leghorm"
thx
MS
YOUNG_TRADER
2nd-June-2006, 09:57 PM
YT
Don't get overexcited.
Zinc drawdown rates have actually been reducing at most locations except New Orleans over recent weeks.
Although the picture for zinc is not poor, the recent fundamentals for copper and nickel suggest these metals in the near term will find strong, favourable action.
Zinc Stocks have fallen to their lowest level in 5 years!
Take a look @ the graphs,
The 1yr graph is almost a straight liner decline after stock increase in June 2005,
rederob
3rd-June-2006, 07:43 AM
Zinc Stocks have fallen to their lowest level in 5 years!
Take a look @ the graphs,
The 1yr graph is almost a straight liner decline after stock increase in June 2005,
YT
The charts are heartening.
My point is only that most out-side activity is presently at New Orleans whereas we were getting draws across the globe in recent months. It's not a negative thing, just not a strong positive.
A few months ago the ratio of cancelled to total LME zinc inventory was over 40%, while today it's only 30%.
The reduced rate of decline is simply an indication of weakening trend, rather than of weakness per se.
As I have posted elsewhere on nickel, that is a metal which is experiencing a sharp fall in stock levels and an increasing cancellation ratio: For those that trade, the traffic signals for nickel are now "green" while for zinc the green light globe needs replacement.
Kipp
3rd-June-2006, 06:32 PM
YT
As I have posted elsewhere on nickel, that is a metal which is experiencing a sharp fall in stock levels and an increasing cancellation ratio: For those that trade, the traffic signals for nickel are now "green" while for zinc the green light globe needs replacement.
Rob, do you find it strange that the Ni producers don't seem to bounce around as much on Nickel spot price as Zinc. I don't follow them all, but if you compare ZFX to Zinc price the too roll hand in hand whereas the movements for SMY do not seem as pronounced(though they are 90% unhedged) do you think maybe the Ni market is skeptical of the $10+/lb mark always suspects a recoil to $8-9 once speculation dries up?
Just a thought.
rederob
3rd-June-2006, 08:29 PM
Rob, do you find it strange that the Ni producers don't seem to bounce around as much on Nickel spot price as Zinc. I don't follow them all, but if you compare ZFX to Zinc price the too roll hand in hand whereas the movements for SMY do not seem as pronounced(though they are 90% unhedged) do you think maybe the Ni market is skeptical of the $10+/lb mark always suspects a recoil to $8-9 once speculation dries up?
Just a thought.
I do find it strange, but nickel is fickle!
Notice that nickel inventories move up and down comparatively more rapidly than zinc, so perhaps players are a lot more wary of nickel's downside (than are keen to punt on upside).
I just look for long term value and good entry prices: Right now I think SMY is an excellent proposition, not just for their nickel but also their copper/cobalt byproduct credits.
michael_selway
3rd-June-2006, 11:02 PM
YT
The charts are heartening.
My point is only that most out-side activity is presently at New Orleans whereas we were getting draws across the globe in recent months. It's not a negative thing, just not a strong positive.
A few months ago the ratio of cancelled to total LME zinc inventory was over 40%, while today it's only 30%.
The reduced rate of decline is simply an indication of weakening trend, rather than of weakness per se.
As I have posted elsewhere on nickel, that is a metal which is experiencing a sharp fall in stock levels and an increasing cancellation ratio: For those that trade, the traffic signals for nickel are now "green" while for zinc the green light globe needs replacement.
yeah i guess the main danger is "in" which gets added to live warrants, if that increases rapidly, its a signal that the outside supply is larger than demand
thx
ms
YOUNG_TRADER
10th-June-2006, 12:57 PM
Zinc stock levels continue to fall!
Total stocks down to 229,250 t's they were 242,025 2 Weeks ago
Thats a 5% decline in 2 weeks
On warrant stocks are @ 158,275 t's they were @ 168,775 2 weeks ago
Thats a 6% decline in 2 weeks
Supply/Demand fundamentals are still dangerously tight, once volatility settles I expect Zinc to charge towards $5000 t
Be prepared!
nizar
10th-June-2006, 04:23 PM
Zinc stock levels continue to fall!
Total stocks down to 229,250 t's they were 242,025 2 Weeks ago
Thats a 5% decline in 2 weeks
On warrant stocks are @ 158,275 t's they were @ 168,775 2 weeks ago
Thats a 6% decline in 2 weeks
Supply/Demand fundamentals are still dangerously tight, once volatility settles I expect Zinc to charge towards $5000 t
Be prepared!
yeh i agree 5000 tonne/soon
but in the short term; the market focus is on inflation leading to higher interest rates; and slowing economic growth in the US (which is still the largest economy in the world dont forget)
so its either time ur entry/top up well, or be prepared to wait a few months
by end of the year, zinc supplies will be very close to full depletion and spot prices will spike - so make sure ur holding zinc stocks when that happens!
but in the short term; the market focus is on inflation leading to higher interest rates; and slowing economic growth in the US (which is still the largest economy in the world dont forget)
so its either time ur entry/top up well, or be prepared to wait a few months
by end of the year, zinc supplies will be very close to full depletion and spot prices will spike - so make sure ur holding zinc stocks when that happens!
Rederob, ZInc Live Warrants went up alot (from singapore), do you knwo why?
coz if zinc loses its fundamental support (of supply shortage) then its back to the long term average for zinc... oh no.. :banghead:
rederob
14th-June-2006, 10:11 PM
Rederob, ZInc Live Warrants went up alot (from singapore), do you knwo why?
From Andy Home's team:
"The warranting of 10,400t of zinc at LME warehouses in Singapore was the first major inflow into the system since early-April, when 10,300t were warranted at Livorno in Italy.
It’s unclear whether this metal—Western brand from what we hear—has been displaced by recent higher Chinese exports, which moved up a gear in April to 19,000t from an average of 10,200t per month in Q1 2006. However, its arrival seems to have been talked about in some parts of the market and as such was not a complete surprise.
Monday was the first daily net rise in the LME headline figure since late April.."
specman
14th-June-2006, 10:23 PM
Could it be that China is selling some of their old reserves to take advantage of the high prices and in doing so,cause prices to drop so they can buy back cheaper?
I understood they were selling their copper reserves recently.
michael_selway
17th-June-2006, 11:44 PM
was gonna ask the same thing..... 8000 in....
coz if zinc loses its fundamental support (of supply shortage) then its back to the long term average for zinc... oh no.. :banghead:
maybe just once or two offs as Rederob's quote appears to say
Btw here are the likely ZINC supply coming on in the next few yrs
http://www.metalin.com/images/zinc-03-big.jpg
http://www.metalin.com/images/zinc-07-big.jpg
The above chart demonstrates that during the period of low zinc prices, from about 2000 to 2004, few mines have been profitable and that it requires zinc prices above $0.60 for mines to be profitable. The Century Mine in Australia, one of the largest and highest grade zinc mines has cash costs of $0.37 per pound. With overhead added to cash costs to determine total costs even Century had marginal profitability until the recent rise in zinc price.
http://www.metalin.com/zincsilvercopper.html
YOUNG_TRADER
19th-June-2006, 09:15 PM
Total stock down under 230k t, with on warrant stocks down to 160kt
Can't wait for September!
Zinc's to your starting line, on your marks, get set...............
YOUNG_TRADER
21st-June-2006, 07:45 PM
Another day another good decline of zinc,
Total stocks down to 226k t on warrant @ 159k t
Kipp
21st-June-2006, 09:12 PM
Another day another good decline of zinc,
Total stocks down to 226k t on warrant @ 159k t
Yeah... the PRICE is declining just as fast...
I don't know much about Zinc supply and demand.. but doesn't it concern you that although the supply deficit is approx 700,000 tonnes p.a. a 7% drop in demand is all it would take for supply = demand. (total consumption is about 10 million tonnes).
And if demand fell 10%... :banghead:
But hey, this could be a naive opinion, cause I don't know how easily achieved that is- (i.e. availabilty of Zinc substitutes etc)
cuttlefish
21st-June-2006, 09:28 PM
A question I have is how good an indicator are the LME stocks for supply vs demand - is all world zinc traded through the LME warehouses? Or does some zinc trade occur directly between producer and consumer (particularly for large consumers). Also just because its gone from the LME official warehouses doesn't mean it isn't still sitting in someones warehouse somewhere else does it?
michael_selway
21st-June-2006, 11:10 PM
A question I have is how good an indicator are the LME stocks for supply vs demand - is all world zinc traded through the LME warehouses? Or does some zinc trade occur directly between producer and consumer (particularly for large consumers). Also just because its gone from the LME official warehouses doesn't mean it isn't still sitting in someones warehouse somewhere else does it?
LME is a base for leftover world supplies basemetals you could say
E.g. ZFX produces zinc everyday, they get shipped to whoever needs them most (across the globe) and left overs are offered to LME, and usually they buy to store for the future. Those who need zinc but who are not offered can buy them from LME if there are supplies left. Although LME is a world base, it physically has warehouses in different cities in the world. LME is just a total count for them all. LME is also a benchmark price for producers to sell at. Something like that i think.
Cuttlefish, in specualtion pepel buy it but dont use it, just hoping to sell at a higher price, but i dont think they have that much.
Kipp u need to keep an eye on "On Warrant" which is about 160k atm, Only when "On Warrant" go down does Zinc price go up. This applies for all basemetals actually
http://img76.imageshack.us/img76/1568/lme9ff.jpg
Btw its not 700k deficit, only 400k deficit
Zinc - Outlook for 2006
8. Global usage of refined zinc metal is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
9. It is anticipated that global zinc mine output will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
10. A further 4.3% increase in world refined zinc metal production to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
11. Chinese net imports of zinc metal are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
12. Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. Current forecasts indicate a shortfall of 437,000 tonnes.
http://www.ilzsg.org/ilzsgframe.htm
rederob
21st-June-2006, 11:27 PM
A question I have is how good an indicator are the LME stocks for supply vs demand - is all world zinc traded through the LME warehouses? Or does some zinc trade occur directly between producer and consumer (particularly for large consumers). Also just because its gone from the LME official warehouses doesn't mean it isn't still sitting in someones warehouse somewhere else does it?
It's a good question.
Producers do not deliver to warehouses as a general matter of choice - they deliver to customers/consumers.
Excess metal is delivered to exchange warehouses and when markets are in oversupply the metal price is in contango, reflecting a premium for storage costs.
When the inventory trend shows sustained withdrawals leading to appreciable drawdowns, and the markets confirm demand is likely to tighten, you should see this reflected in LME stock levels.
That said, there is a lot more to it as you must bear in mind that warehouses are located globally, and stock might exist in quantities out of kilter with where demand is strong. This is especially the case presently with most copper stock in Asia, and with strong demand in both Europe and the US.
cuttlefish
22nd-June-2006, 09:25 AM
Thanks for the answers michael and rob - thats explained it well.
Kipp
22nd-June-2006, 09:15 PM
Thanks MS- the figure of 700K deficit was from memory in this thread... guess I was wrong...
Do you have any theory on why Zn and Cu prices are linked? It doesn't make sense to me as I thought they were used in different alloys... and funamentally Zn is much stronger than Copper.
nizar
22nd-June-2006, 09:57 PM
Thanks MS- the figure of 700K deficit was from memory in this thread... guess I was wrong...
Do you have any theory on why Zn and Cu prices are linked? It doesn't make sense to me as I thought they were used in different alloys... and funamentally Zn is much stronger than Copper.
copper - plumbing, piping, electrical wiring
zinc - anti-corrosive, galvanising
they are linked partly i think because people are pouring money into commodity funds that invest in metals; they buy a bit of zinc, copper, gold, etc
michael_selway
27th-June-2006, 12:25 AM
copper - plumbing, piping, electrical wiring
zinc - anti-corrosive, galvanising
they are linked partly i think because people are pouring money into commodity funds that invest in metals; they buy a bit of zinc, copper, gold, etc
http://metalsplace.com/metalsnews/?a=5749
Australia's ABARE: Zinc prices may keep rising next year
Source: Dow Jones
Zinc CatalogZinc prices are expected to surge 17% in 2007, adding to a forecast more than doubling this year as growth in global mine output continues to fail to match demand, Australia's government commodities forecaster said Monday.
Zinc is forecast to average US$3,500 a metric ton in 2007, up from US$3,000 in 2006 and US$1,382 a ton last year, the Australian Bureau of Agricultural and Resource Economics, or ABARE, said in its June quarter report. Spot zinc closed at US$2,940 a ton in London Friday.
"The rise in prices so far this year reflects a market characterized by slow growth in zinc mine supply, concerns over supply disruptions, strong global demand for zinc and low and steadily declining zinc stocks," ABARE said.
"Compounding these effects has been an increase in targeting of base metals such as zinc by investment funds and financial speculators," ABARE said.
A strengthening of world economic growth is expected to drive demand for galvanized steel, zinc's main use, in the construction and automotive industries in 2006 and 2007, ABARE said.
World production is expected to grow to 10.7 million metric tons this year, up from 10.3 million tons in 2005. A further rise in output to 11.2 million tons is forecast for 2007.
The gains aren't expected to be enough to cope with demand though, ABARE said.
World consumption is expected to rise to 11.1 million tons in 2006 and again to 11.4 million tons next year.
Below is taken directly from ABARE.
ABARE has never been particularly bullish on metals and traditionally underestimate prices by a large margin.
zinc prices to rise in 2006
In the fi rst fi ve months of 2006, world zinc prices averaged US$2660 a tonne (US121c/lb). Zinc prices are forecast to average about US$3200 a tonne (US145c/lb) in the September quarter and around US$3000 a tonne (US136c/lb) for the year as a whole — the highest annual zinc price in real terms (2005-06 dollars) since 1974 when prices averaged over US$5000 a tonne (US227c/lb).
Growth in world mine output has been unable to keep pace with consumption owing to a lack of investment in new mine capacity over the past ten years. With consumption exceeding production in the fi rst half of the year, zinc stocks have fallen. Since the end of December 2005, stocks held by the London Metal Exchange have declined by over a third to 240 000 tonnes at the end of May.
Total reported stocks — which are stocks held by the London Metal Exchange, the private sector and governments — at the end of 2005 were the equivalent of 5.9 weeks of consumption. With consumption expected to exceed production in 2006, total reported stocks are forecast to decline to 2.9 weeks of consumption by year’s end.
In 2007, consumption is again forecast to exceed production, leading to a forecast rundown in stocks to 1.9 weeks of consumption. As a result, world zinc prices are forecast to rise by a further 17 per cent to average around US$3500 a tonne (US159c/lb) for the year.
michael_selway
27th-June-2006, 11:13 PM
Below is taken directly from ABARE.
ABARE has never been particularly bullish on metals and traditionally underestimate prices by a large margin.
zinc prices to rise in 2006
In the fi rst fi ve months of 2006, world zinc prices averaged US$2660 a tonne (US121c/lb). Zinc prices are forecast to average about US$3200 a tonne (US145c/lb) in the September quarter and around US$3000 a tonne (US136c/lb) for the year as a whole — the highest annual zinc price in real terms (2005-06 dollars) since 1974 when prices averaged over US$5000 a tonne (US227c/lb).
Growth in world mine output has been unable to keep pace with consumption owing to a lack of investment in new mine capacity over the past ten years. With consumption exceeding production in the fi rst half of the year, zinc stocks have fallen. Since the end of December 2005, stocks held by the London Metal Exchange have declined by over a third to 240 000 tonnes at the end of May.
Total reported stocks — which are stocks held by the London Metal Exchange, the private sector and governments — at the end of 2005 were the equivalent of 5.9 weeks of consumption. With consumption expected to exceed production in 2006, total reported stocks are forecast to decline to 2.9 weeks of consumption by year’s end.
In 2007, consumption is again forecast to exceed production, leading to a forecast rundown in stocks to 1.9 weeks of consumption. As a result, world zinc prices are forecast to rise by a further 17 per cent to average around US$3500 a tonne (US159c/lb) for the year.
Hm contrast that with
Copper above historical price levels until end-07 -SocGen
Source: Dow Jones
Copper CatalogCopper prices will remain far above historical norms until late during 2007, outperforming other base metals on the basis of strong supply and demand fundamentals, Societe Generale said Monday.
Market tightness is sufficient to reignite the bull market in the third quarter, making copper the London Metal Exchange metal most likely to reach new highs, the bank said in a report. LME three-month copper hit a record high of $8,825/ton in May.
Copper is forecast to show a deficit of 100,000 metric tons in 2006 and a balanced market during 2007.
During 2006, LME cash prices will average $7,250/ton and $6,300/ton.
However, copper prices will also be particularly sensitive if and when investor sentiment turns, SocGen added.
Following flat global demand growth in 2005 due to large scale destocking, copper substitution will confine world demand growth to 4.5% during 2006.
On the supply side, mine capacity utilization no longer looks likely to improve this year, although refined output should rise by over 5%, SocGen said.
"Mines could perform better in 2007 but refined growth will slow," the report said.
The zinc market is seen in a 350,000-ton deficit during 2006, contracting to a 150,000-ton deficit in 2007.
LME cash prices are forecast at $3,175/ton for 2006 and $2,350/ton next year.
"In the case of zinc at least, therefore, we doubt the boom-bust pattern is a thing of the past and prices should eventually fall sharply. However, this is not yet on the market's radar screen and growing tightness suggests that zinc should return to outperforming for the next few months," SocGen said.
Aluminium on the other hand will continue to underperform given its weaker fundamentals and is likely to average $2,740/ton during 2006 basis LME cash and $2,350/ton in 2007.
http://metalsplace.com/metalsnews/?a=5773
thx
MS
YOUNG_TRADER
8th-July-2006, 11:37 AM
Spots above $1.50 a lb even with copper falling 3% last night, de-railing? Would need to see more evidence of this but it looks like mkt is starting to appreciate Zinc fundamentals,
More and more focus of near linear drawdowns, more and more specualtion of Zinc running out of stock, I doubt that, but inventory levels will get dangerously low IMO,
Nice article on ZFX, also mentions JV's with 2 of my fav's TZN (enjoyed my run) BSM (Yet to run)
Zinc bull takes future by the horns
Robert Gottliebsen, Vision 2000
July 08, 2006
ZINIFEX believes the next three years will be good for zinc and that the stock market is under-pricing its future prospects.
Chief executive Greig Gailey says analysts have not factored in his long-term plans to ensure the company will still be prospering in 15 years. So when you ask him whether he would recommend a bid at a 30 per cent premium to the market, he comes back quickly: "We would probably hold out for 60 per cent."
But Gailey is a realist and knows the resource industry is undergoing dramatic consolidation and Zinifex has an open register, making it vulnerable. But the zinc boom has given him strong cash flow, which means that Zinifex could itself do a share-exchange deal with a company that had major developments requiring finance.
Gailey has had an incredible roller-coaster ride since leaving BP and becoming chief executive of Zinifex's predecessor, Pasminco, in August 2001. He had barely put his feet under the desk when the operation was put into administration.
But Gailey stayed with the enterprise and worked with the administrator, finally helping to engineer the float. In the year to June 30, he will be rewarded because analysts expect Zinifex to earn $950 million - paradoxically, the exact sum the banks received in the public float which crystallised their $2 billion loss.
Zinifex's 2005-06 earnings received a big boost from zinc prices in the second half so analysts are looking for a profit in the vicinity of $1.5 billion, or around $2.70 per share, in 2006-07. That puts the company on a projected price/earnings ratio of between three and four.
It is at this low level because around 80 per cent of the Zinifex profit comes from the Century zinc mine, which is a discrete ore body that will produce at full capacity (500,000 tonnes) until 2016 when production will suddenly come to an end. Until 2011, the company will need to spend around $100 million annually on overburden removal. In the final five years, cash generation will skyrocket, depending on the zinc price.
Gailey is a zinc price bull for at least the next three or four years. He points out that during the decade to 2000, many big new zinc mines, including Century, were commissioned, flooding the market and causing the price to slump to uneconomic levels. Exploration was halted and new projects mothballed. Then demand from China took out the surplus production, and there are no new major, committed projects, so the price has risen to above $US3300 a tonne - a more than fourfold increase from the level of the tough years.
After 2011, whether the price holds that level, goes higher or slips back will depend on demand at that time and whether the major miners ramp up major new mines. But Gailey points out that because no major company has committed to a significant new mine, it will be four or five years before one is started.
There are very few major ore bodies awaiting development because exploration was stopped. The biggest undeveloped ore body is in Iran and, not surprisingly, the political risks are deterring capital investment. Others are in frozen areas of North America that will be very costly to develop. The majors are hesitating because capital costs have ballooned and they need a sustained zinc price that is substantially above previous levels to justify investment.
The memory of the slump of 2000 is still fresh. The market is pricing Zinifex shares on the basis that by 2016 it will have only token zinc production and will be left with four smelters.
Gailey has a four-point plan to prove the market wrong. The first step is to develop the Dugald River mine near Cloncurry. Dugald River was sold to Zinifex (then Pasminco) by Rio Tinto as part of the Century zinc sale. It is high-grade zinc ore which contains manganese which previously made it very unattractive to smelters. But modern Chinese smelters can treat zinc concentrates containing manganese.
The company is conducting a pre-feasibility study and, if this proves successful in 2007, there will be a full feasibility study leading to a mine that will produce around 200,000 tonnes of zinc a year (two-fifths of Century).
Zinifex has no net debt and will be able to fund the $500 million Dugald project from cash flow.
Gailey's second plan is to accelerate exploration around Century. When Rio Tinto explored the area, it was looking for copper and Gailey is optimistic that he can find at least one ore body that will enable zinc production from the company's Century facilities to continue after 2016.
Zinifex exploration outside these two projects is designed to take a majority stake in highly prospective areas found by junior miners. In South Australia, it is funding an $8 million exploration program to earn a 70 per cent stake in the highly prospective Minninnie zinc deposit owned by Terramin. If the exploration produces disappointing results, Zinifex will walk away. It has done a similar deal with the Base Metals group in Tasmania.
Zinifex also believes the company should do joint deals with junior explorers in North and South America where there are highly prospective zinc prospects.
In all, it plans to spend $90 million over the next three years on exploration.
Greg Gailey's policy of not attempting to peg out leases in areas outside of the mining sites but to allow junior explorers to do the early work is a radical departure from conventional exploration thinking.
The third plan is to further develop the company's second mine at Rosebery, Tasmania, which has been producing for around 70 years. The company is to spend $19 million to determine exactly how much ore is in the mine and, once again, the company is confident Rosebery will still be producing well after 2016.
Modern, conventional miners rarely have a substantial investment in smelting. Indeed, one of the reasons why companies are reluctant to bid for Zinifex is its ownership of four smelters. Potential bidders fear that if any of these smelters need to shut, the company will be hit with an enormous clean-up bill.
Gailey disputes this, pointing out that the cost of closing the smelter at Cockle Creek was less that $50 million. The company has no plans to shut any of its smelters, but, theoretically, if it shut its Dutch smelter, the value of the real estate would yield a profit on the closure. The Dutch smelter is very profitable and expanding because it is efficient and Europe is now short of smelter capacity.
The company receives periodic bad publicity from the historic problems at Port Pirie. Gailey says the company is moving to overcome the Port Pirie problems created by Zinifex's heritage. Longer term, he believes the Port Pirie complex will help the company make an important thrust into zinc recycling.
Gailey can see smelting as an important source of future profits for Zinifex but does not plan to open new smelters because that would involve investing in new projects in Third World countries. Any surplus cash will be returned to shareholders.
If Gailey is wrong (and the market is right), then by 2010 Zinifex will only have six years to run at Century, although it should be starting to ramp up Dugald.
But Gailey's vision is that the company will have by then found two ore bodies the size of Rosebery so that it can maintain production beyond the Century closure.
Most resource giants have projects coming forward and are not faced with the stark reality of mine closures as a result of a failure to explore. But the zinc boom has given Gailey and his people the cash to reverse their history and create their own future.
Gailey might, of course, recommend a bid a little lower than a 60 per cent premium on the market. But it won't be much lower because he is supremely confident Zinifex can be a major zinc producer well beyond 2016.
He believes demand for zinc will continue to rise because of the development of China and the high cost of alternative products like aluminium and stainless steel.
michael_selway
9th-July-2006, 09:51 PM
Spots above $1.50 a lb even with copper falling 3% last night, de-railing? Would need to see more evidence of this but it looks like mkt is starting to appreciate Zinc fundamentals,
More and more focus of near linear drawdowns, more and more specualtion of Zinc running out of stock, I doubt that, but inventory levels will get dangerously low IMO,
Nice article on ZFX, also mentions JV's with 2 of my fav's TZN (enjoyed my run) BSM (Yet to run)
Zinc bull takes future by the horns
Robert Gottliebsen, Vision 2000
July 08, 2006
ZINIFEX believes the next three years will be good for zinc and that the stock market is under-pricing its future prospects.
Chief executive Greig Gailey says analysts have not factored in his long-term plans to ensure the company will still be prospering in 15 years. So when you ask him whether he would recommend a bid at a 30 per cent premium to the market, he comes back quickly: "We would probably hold out for 60 per cent."
Zinifex: More Than a Miner
By Robert Gottliebsen
Watch the Greg Gailey interview
Hear the Greg Gailey interview
PORTFOLIO POINT: Zinifex’s smelting operations and active exploration program underline its determination to extend its resource base.
Background, by Eureka Report editor James Kirby. Greg Gailey, chief executive of Zinifex, may be sitting on Australia's cheapest mining stock (see Mike Mangan's story today), but the group's heavy exposure to a single commodity — zinc — and more specifically, a single mine —Century mine — has kept institutional shareholders away from the stock.
However, as Gailey makes clear to Robert Gottliebsen* in today's video interview, Zinifex has been making every effort to ensure that once the Century mine runs out in 2016, his company will be well placed to extend its operations through new mining projects already under development.
Zinifex is a two-year-old company but it carries the baggage of one of the mining industry's biggest recent failures. The company was reborn from the ashes of Pasminco, which went under after a hedging program went spectacularly awry in the mid-1990s.
Rising costs across its mining operations mean Zinifex is now heavily dependent on strong industrial demand to drive zinc prices higher in the near future. As Gailey stresses throughout the interview, Zinifex is more than just a mining company: it also has extensive and profitable smelting operations.
The interview
Robert Gottliebsen: What’s your view on the outlook for the zinc price over the next three or four years?
Greg Gailey: We’re very bullish about the zinc market and the reason we’re very bullish is we see China demand as continuing for a prolonged period; that is, what’s happening in China today is not just a couple of years; this is a decade-long phenomenon. Second, we see constrained supply. It takes some four to five years to bring a major project to market — a new mine and those projects are simply not in the pipeline, so we think an ongoing shortage of supply is with us for at least a couple of years and possibly beyond that.
But there’s a big deposit in Iran which could change the outlook at little.
I don’t know that it’ll change things. That deposit is certainly earmarked for development by a company called Union Resources in cooperation with the Iranians, but Iran’s a very difficult political environment and I think companies are going to require relatively high rates of return to operate in those countries.
Around 80% of the Zinifex profit comes from the Century mine. What are you doing to maintain it and how long will it last?
Century is due … the current ore body will expire in 2016. It’s a well-defined discrete ore body. We hold some 2000 square kilometres of exploration leases around Century and we’re very active in exploring in that area, looking for another deposit that we will be able to exploit through the infrastructure that exists there. We’re also actively exploring in Tasmania; and we’re in partnership with Terramin in South Australia; and we’re actively looking for other joint venture opportunities to explore. So we believe that we will be successful in discovering additional orebodies and the company will renew its resource base.
What are you doing at Century to maintain production to 2016?
Century was constructed to operate at 500,000 tons a year and it will do that right through till the last day, effectively, and we therefore have no issues in terms of the production out of Century over the life of the mine. Costs are certainly a key problem for the industry at this point in time. Costs are escalating. Operating costs are up. Capital costs are up and we’re doing everything we can to contain that. We have a project called Project Productivity, which was designed to take 450 positions out of the company over two years. We’re 12 months into that. We’ve taken more than 200 out in that period so we’re doing everything we can to contain costs, but quite frankly they’re escalating at a more rapid rate than we can contain them.
Are you accelerating the removal of overburden?
We are at Century. We are bringing forward overburden removal over the next three years and that will mean that costs in the last few years of that mine’s life will decline and the cash flow therefore coming out of Century increases actually as the mine nears the end of its life.
Zinifex has four smelters. Do you see that as a long-term business for the company?
Smelting’s actually a good business and, interestingly enough, despite the fact that the treatment charge the smelter gets — which is what the mine pays the smelter to convert the concentrate to metal — are actually at record lows, smelting profitability is actually at record highs. And the reason for that is one of the idiosyncrasies in the zinc market: that smelters only pay for about 90% of the metal they receive so they actually recover about 10% more than they pay for. With current metal prices, that incremental metal is very valuable and hence smelters are actually making record profits. We see smelting as an ongoing part of the company and one that will make a contribution to its profitability.
Does the clean-up factor and the pollution worry you in the smelting business?
No. We have a very clear policy that we want to be good corporate citizens and we want to be welcomed in the areas we operate. We are addressing legacy issues and we acknowledge we inherited some when we acquired the assets from Pasminco. We’re actively addressing those. We have a plan to spend, for instance, $56 million in the next three years in South Australia addressing some of the lead issues in Port Pirie, and we believe that the clean up ultimately is manageable, when and if it occurs, when a site is closed. But we have no intention to close any of our smelters.
Greg if you’re right about the zinc price, the market is taking a very conservative view about the prospects of the company.
One of the issues we have with the market is the market doesn’t give us any value for the ultimate renewal of the assets we have, and in a resource business if you can’t renew the assets then clearly you disappear. We have a very active exploration program. We think we have some exceptional prospects in highly prospective areas such as around Century in Queensland and, quite frankly, the market is giving us no credit for us being successful in that regard.
What are you going to do with your cash?
Again, we’ve got a very clear policy on that, which we’ve stated and we’ve lived by —that is, that if we cannot use that cash internally to shareholders’ benefit then it will be given back to shareholders, and in our short life of two years we’ve had two dividends and a share buyback.
If I made you a takeover offer of, say 30% on the current market price, would you take it?
No it wouldn’t be enough.
How much do you want?
As much as I could get.
Seriously, do you see a likelihood of more global mergers in the mining business?
think it’s inevitable, for two reasons. One there is clearly advantages to the industry in having fewer larger players, and when I say advantages, the key advantage to me is you get a more sensible scheduling of increments and expansion. One of the industry’s biggest problems is too much additional capacity comes in in too short a time frame and the price drops. So you get a more sensible structuring of project development. The other reason is that it’s the nature of the beast; that is, if you look at most of the large mining companies that exist today they’re products of amalgamations and that amalgamation will go on. The other interesting thing about the industry is that as the food chain … people move up the food chain … a whole lot of new people come in at the bottom and there’s never a shortage of new companies coming into mining. So new companies coming in all the time and amalgamations occurring and bigger companies emerging.
And, of course, you’re using those new companies as part of your exploration?
Absolutely.
* Robert Gottliebsen is a national business commentator for The Australian.
LME Warehouse Stocks 11 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 205825 525 1950 -1425 155600 50225
YOUNG_TRADER
12th-July-2006, 10:40 AM
Zinc stock levels continue to fall!
Total stocks down to 229,250 t's they were 242,025 2 Weeks ago
Thats a 5% decline in 2 weeks
On warrant stocks are @ 158,275 t's they were @ 168,775 2 weeks ago
Thats a 6% decline in 2 weeks
Supply/Demand fundamentals are still dangerously tight, once volatility settles I expect Zinc to charge towards $5000 t
Be prepared!
Well that was mid june, roughly 1 month ago Zinc stocks 230k t's today 205k t's a decline of 11% or so in 4 weeks
On warrant were 158k t's today 155.6k t's a decline of 1.5% in 4 weeks (hmmm not as big!)
michael_selway
12th-July-2006, 05:43 PM
Well that was mid june, roughly 1 month ago Zinc stocks 230k t's today 205k t's a decline of 11% or so in 4 weeks
On warrant were 158k t's today 155.6k t's a decline of 1.5% in 4 weeks (hmmm not as big!)
yeah might hit a snag at 155k abouts
http://img82.imageshack.us/img82/644/lme8lr.jpg
thx
MS
rederob
12th-July-2006, 06:47 PM
MS and YT
You are not looking at the picture from the best angle.
It is true that the rate of decline of total LME inventory is decreasing, but it is still decreasing.
The causes are several fold. Most important is the re-warranting of "cleaned" stock back into New Orleans. That is, damaged stock from Katrina is being made good for sale, so we have had a lot of metal coming and going from New Orleans and muddying the gross data. My estimate is that we are very close to the end of this re-warranting cycle and the LME zinc data hereonin is likely to be much more reliable.
Note that New Orleans accounts for over 70% of LME's warehouse zinc stock and over 80% of cancelled warrants (ie the zinc ready to leave the warehouse).
Buying of base metals this time of year is always cyclically weak - don't lose sight of this very, very important fundamental driver of price.
The good news is that inventory drawdowns are relatively well balanced across the globe at present, so while New Orleans is the key to market direction, we need to open our eyes to wider market action as it occurs.
Lowest low of inventory in past 5 years: 16 May 2005 - LME nickel ends the day at $7.33lb. LME nickel inventories slipped to stand at 4,926 tons.
YOUNG_TRADER
13th-July-2006, 09:55 PM
LME Warehouse Stocks 11 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 203575 0 2250 -2250 150650 52925
Hmmmmm On warrant dropped by 5k t's overnight!
Also Red I am super bullish on Zinc, I was just commenting on how total stockpiles had decreased significantly while On-Warrants hadn't as much,
Monday should see Zinc below 200kt's!
YOUNG_TRADER
14th-July-2006, 10:34 AM
So Close to that 200k t level :D
LME Warehouse Stocks 13 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 201825 0 1750 -1750 149150 52675
YOUNG_TRADER
18th-July-2006, 10:21 AM
This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,
LME Warehouse Stocks 17 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 202700 3550 1425 2125 145075 57625
michael_selway
18th-July-2006, 11:05 AM
This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,
LME Warehouse Stocks 17 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 202700 3550 1425 2125 145075 57625
But "In" went up which is a bad thing, but maybe the 3550 "In" was Cancelled straight away? Compare 17/07/06 and 14/07/06?
http://img80.imageshack.us/img80/6689/lmekk0.jpg
rederob
18th-July-2006, 11:52 AM
Lads
Keeping zink in the pink with the missing link:
michael_selway
18th-July-2006, 12:02 PM
Lads
Keeping zink in the pink with the missing link:
hehe thx red
Btw where did you get that info below that shows cancelled today seperate from total cancelled
thx
MS
YOUNG_TRADER
18th-July-2006, 12:04 PM
Lads
Keeping zink in the pink with the missing link:
Truely poetic, I am to think, the way you rhymed zink, link and pink, twas a marvel I am to say, tis a pity it shall still be a nervous day :D
rederob
18th-July-2006, 06:10 PM
hehe thx red
Btw where did you get that info below that shows cancelled today seperate from total cancelled
thx
MS
That would be telling!
My tables are better than the ones I use to get the info from, so a "variety of sources" is the correct answer.
Tracking the fundamentals is plain hard work!
Kipp
18th-July-2006, 09:42 PM
LME Warehouse Stocks 11 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 203575 0 2250 -2250 150650 52925
Hmmmmm On warrant dropped by 5k t's overnight!
Also Red I am super bullish on Zinc, I was just commenting on how total stockpiles had decreased significantly while On-Warrants hadn't as much,
Monday should see Zinc below 200kt's!
So... by you maths if there's 145K "on warrant" and LME drops ~2000 tonnes/day. Then theres ~75 trading days (i.e. weekdays till 0?) so 15 weeks... mid October?
michael_selway
18th-July-2006, 10:05 PM
So... by you maths if there's 145K "on warrant" and LME drops ~2000 tonnes/day. Then theres ~75 trading days (i.e. weekdays till 0?) so 15 weeks... mid October?
2000 tonnes/day is quite optimistic one woudl think
1000+ tonnes/day more conservative
Also higher prices may slow cancellation rate naturally
thx
MS
rederob
18th-July-2006, 10:22 PM
So... by you maths if there's 145K "on warrant" and LME drops ~2000 tonnes/day. Then theres ~75 trading days (i.e. weekdays till 0?) so 15 weeks... mid October?
Kipp
The metal cupboard is seldom emptied: Higher backwardations as exchange warehouse stocks decline means opportunists "find" spare metal anywhere and everywhere.
So the last 20,000 tonnes of metal is hard to lower, quickly, as there is a nice premium selling into spot.
I concede that by October we are likely to see zinc tighter than copper is currently, and likely to do what copper did earlier this year: It's all good!
Kipp
19th-July-2006, 10:37 PM
Kipp
The metal cupboard is seldom emptied: Higher backwardations as exchange warehouse stocks decline means opportunists "find" spare metal anywhere and everywhere.
So the last 20,000 tonnes of metal is hard to lower, quickly, as there is a nice premium selling into spot.
I concede that by October we are likely to see zinc tighter than copper is currently, and likely to do what copper did earlier this year: It's all good!
I guess I can wait 3 months... ;)
nizar
19th-July-2006, 11:02 PM
I concede that by October we are likely to see zinc tighter than copper is currently, and likely to do what copper did earlier this year: It's all good!
Agree
And then next year it will do what nickel is doing right now
And with respect to wats happening with nickel right now, theres about 180million dollars worth of nickel left according to LME data, so if u buy the lot, could u effectively make a squillion by slowly selling into the spike?
Of course, buying 100million dollars or so worth of nickel-mining stocks would also help your cause...
Surely this would be a good idea for someone cashed up like Jim Rogers for example ?
michael_selway
19th-July-2006, 11:28 PM
Agree
And then next year it will do what nickel is doing right now
And with respect to wats happening with nickel right now, theres about 180million dollars worth of nickel left according to LME data, so if u buy the lot, could u effectively make a squillion by slowly selling into the spike?
Of course, buying 100million dollars or so worth of nickel-mining stocks would also help your cause...
Surely this would be a good idea for someone cashed up like Jim Rogers for example ?
hehe could be, btu 1 thing u have to remember, as you buy up fast, price will be higher and higher, so in reality u cant buy all of it at 180mil in one go
Consider shares and market depth, the sell orders get higher and higher
thx
MS
dubiousinfo
21st-July-2006, 08:14 AM
Zinc shortfall was 120 000 t in first 5 months
--------------------------------------------------------------------------------
Zinc supply fell short of demand for the first five months of the year, because of higher consumption of the metal used to galvanize steel, the International Lead and Zinc Study Group said.
Zinc production was 120 000 tons less than demand, compared with a shortfall of 98,000 tons a year earlier, the Lisbon-based group said in a report on its Web site today. The group is funded by the governments of producing and consuming countries.
Demand rose 2,4% to 4,47-million t, the group said. Production grew 1,9% to 4,35-million t.
Lead production outpaced consumption in the first five months by 76 000 t, the group said. Demand rose 6,2% to 3,29-million t and supply jumped 10% to 3,36-million tons.
YOUNG_TRADER
22nd-July-2006, 11:00 AM
So Close to that 200k t level :D
LME Warehouse Stocks 13 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc demand/supply deficit is no boubt supporting its $1.35-$1.50 price level, as declines continue in stock levels I'd expect Zinc to start firming up to around the $1.60-$1.70 level,
As stated previously I wasn't that bullish on copper and its supply surplus is now dragging the price down, however if a LT price of $3 lb prevails it will be amazing profits for the Copper boys!
rederob
22nd-July-2006, 12:14 PM
As stated previously I wasn't that bullish on copper and its supply surplus is now dragging the price down, however if a LT price of $3 lb prevails it will be amazing profits for the Copper boys!
What supply surplus YT?
There is no copper at LME warehouses in Europe, very little in the US, and even Shanghai had a declining inventory last week.
There is half the amount of copper at warehouses as there is zinc, and daily copper use is significantly greater than zinc's.
Zinc is yet to hit "tight supply", but copper has been there for 2 years to date.
I like zinc's fundamentals but copper and nickel can go ballistic quickly: Zinc is just a comparatively "safe" play for now.
michael_selway
24th-July-2006, 10:22 PM
What supply surplus YT?
There is no copper at LME warehouses in Europe, very little in the US, and even Shanghai had a declining inventory last week.
There is half the amount of copper at warehouses as there is zinc, and daily copper use is significantly greater than zinc's.
Zinc is yet to hit "tight supply", but copper has been there for 2 years to date.
I like zinc's fundamentals but copper and nickel can go ballistic quickly: Zinc is just a comparatively "safe" play for now.
Is Copper& Nickel really that bullish?
nothing in warehouses doesnt mean anything, its the "ins" vs "cancelling" thats is a better picture of underlying demand/supply
thx
MS
rederob
24th-July-2006, 10:52 PM
nothing in warehouses doesnt mean anything, its the "ins" vs "cancelling" thats is a better picture of underlying demand/supply
thx
MS
That's a bit silly.
If there is nothing coming in, and nothing going out, because there just is nothing available, then what better picture do you want?
Get with the program lad!
michael_selway
24th-July-2006, 11:06 PM
That's a bit silly.
If there is nothing coming in, and nothing going out, because there just is nothing available, then what better picture do you want?
Get with the program lad!
LME is just a base for leftovers (basemetals)
Most of the actual buying and selling is outside LME
Its possible that there is virtually nothing in LME, but the outside market is in perfect balance, so prices wont skyrocket
Also alot of "Ins" are more dangeours than low "cancellations", cause cancellations may be "fake" buying (eg by hedge/pension funds), but there cant be fake selling into LME right?
LME is just a base for leftovers (basemetals)
If that were so then no metal would be drawn into LME warehouses when demand was tight.
In reality the opposite occurs.
High backwardation is in fact a safety valve for exchange warehouses, immediately drawing in metal because more is paid in the spot market than in the futures market.
Most of the actual buying and selling is outside LME
Quite true, and justly so.
Consumers must lock in supply from producers, typically via long term contracts, in order to maintain steady production of their business lines.
Its possible that there is virtually nothing in LME, but the outside market is in perfect balance, so prices wont skyrocket
Have never seen any example of this in the years I have been following base metals. LME and other exchange warehouses carry inventory in many cases simply because producers no longer feel they need to. For example, "just in time" production sees the carrying risk borne by warehouses rather than themselves: There is a significant cost to carrying inventory, and carrying "excess" inventory is nowadays folly.
Also alot of "Ins" are more dangeours than low "cancellations", cause cancellations may be "fake" buying (eg by hedge/pension funds), but there cant be fake selling into LME right?
The issue of "faking" is not one I have paid much attention to because the players in these markets stump up with plenty of money to establish a position, and the regulators would be on dishonest practices in a flash. Note that this is different to simply writing futures that could catch the writer short (a la Lui Qibing and the SRB fiasco).
rederob
25th-July-2006, 11:22 PM
Zinc stocks are plummeting this week and cancelled warrants have increased markedly.
Given we are in the lull of the northern metals market, present action suggests that the last quarter's action will be hectic and prices rocket.
I am now tipping zinc to comfortably finish this year within cooee of $5000 per tonne.
YOUNG_TRADER
25th-July-2006, 11:41 PM
Zinc stocks are plummeting this week and cancelled warrants have increased markedly.
Given we are in the lull of the northern metals market, present action suggests that the last quarter's action will be hectic and prices rocket.
I am now tipping zinc to comfortably finish this year within cooee of $5000 per tonne.
Access is tipping nickel prices to fall about 45 per cent between now and 2008, with slightly smaller falls for copper, cobalt, alumina, zinc and tin.
"Prices of base metals (excluding zinc), alumina, cobalt, oil and coking coal are expected to fall from their June quarter peaks over the forecast period.
"Prices are expected to fall by more than 15 per cent in each case, while copper prices are expected to fall by more than 40 per cent."
yeah no idea why http://www.basemetals.com/stocks.aspx is blank
thx
MS
michael_selway
3rd-August-2006, 08:46 AM
And again today, no info on stock levels, Redrob or MS you got any info on Zinc activity?
Thanks
Alot of in today and -ve cancelled!
http://img49.imageshack.us/img49/5991/lmeeg6.jpg
26.6%. It’s still a high level but not quite as dramatic as we have got used to in registered zinc stocks.
thx
MS
nizar
3rd-August-2006, 06:43 PM
i wasnt happy seeing the total stocks go up by 10,200tonnes but yeh doesnt matter spot price didnt seem to react to drastically..
hurricane season is here.... :D
rederob
3rd-August-2006, 08:32 PM
i wasnt happy seeing the total stocks go up by 10,200tonnes but yeh doesnt matter spot price didnt seem to react to drastically..
hurricane season is here.... :D
nizar
In june last year there was a massive inflow of zinc (+110k tonne from memory) and it too had a minimal impact on the price or trend at the time.
14 months later stock levels are some 450,000 tonnes lower, and markedly lower than any time in the last 5 years.
And the difference 5 years ago was that zinc demand was poor, and stock builds grew substantially.
I expect that within the fortnight yesterday's delivery will be but an oblivious pimple on the face of zinc's glorious profile.
michael_selway
5th-August-2006, 01:23 AM
nizar
In june last year there was a massive inflow of zinc (+110k tonne from memory) and it too had a minimal impact on the price or trend at the time.
14 months later stock levels are some 450,000 tonnes lower, and markedly lower than any time in the last 5 years.
And the difference 5 years ago was that zinc demand was poor, and stock builds grew substantially.
I expect that within the fortnight yesterday's delivery will be but an oblivious pimple on the face of zinc's glorious profile.
yeah every now and then there appears "ins" from no where
Mike... it's 1:30 am... get some sleep. Metal prices aren't gonna move all weekend so relax... (unless of course you live on the Wes Coast, in which case it's 11:30.. still too late to be thinking about Zinc on Friday!
yeah every now and then there appears "ins" from no where
Here's an odd thought... Mines operate 7 days a week (well, maybe not BMO but most do...) yet the metal markets are only open Mon-Fri. So does that mean Friday's spot prices are the accepted price for the weekend (and therefore carry more significance than Mon-Thurs clsoing prices)? Or have I missed something here???
rederob
5th-August-2006, 06:05 PM
Here's an odd thought... Mines operate 7 days a week (well, maybe not BMO but most do...) yet the metal markets are only open Mon-Fri. So does that mean Friday's spot prices are the accepted price for the weekend (and therefore carry more significance than Mon-Thurs clsoing prices)? Or have I missed something here???
Kipp
Not quite sure of your point, but will try a reply.
Metals producers have 3 major options/choices to sell their metal.
Most will deliver into long term "offtake" contracts. Often these contracts will use LME benchmarked average prices, but not always.
Secondly, some metal may be delivered into "hedge" contracts. That is, the company has entered the market to forward sell an agreed quantity of metal at a set price. In the present bull market most of these hedge contracts have a negative mark to market value - that is, they involve selling metal at a lesser price than the prevailing price.
Unhedged producers that sell some or all (tho can't believe anyone would be selling all) their metal into the spot market have the advantage of being exposed to rising prices. Their disadvantage would be when the market turned sour and their profits reduced commensurately.
Producers will opten mix and match some of these options in order to "balance" their market risk. For example, recently a gold miner (Croesus) has been unable to satisfy its hedge commitments and is presently under administration because it does not have the finances to buy its way out of its bind. Croesus had the double problem of poor forward prices in a rising market, and inability to meet contracted quantities for delivery.
This may not answer your question, Kipp, so you might want to use the above info to rephrase it.
kennas
10th-August-2006, 10:22 AM
1001 [Dow Jones] Oxiana (OXR.AU), Kagara (KZL.AU) likely to outperform fellow miners, broader market after LME copper, zinc prices rallied 2-3% overnight on supportive supply side newsflow, weaker USD; with metal traders, analysts waiting for confirmation of upside breakout, suggesting further gains. Zinc pure-play Zinifex (ZFX.AU), gold miners Newcrest (NCM.AU), Lihir (LHG.AU) also set to gain on higher overnight metal prices. (JAD)
Kipp
12th-August-2006, 09:47 AM
Kipp
Not quite sure of your point, but will try a reply.
Metals producers have 3 major options/choices to sell their metal.
Most will deliver into long term "offtake" contracts. Often these contracts will use LME benchmarked average prices, but not always.
Secondly, some metal may be delivered into "hedge" contracts. That is, the company has entered the market to forward sell an agreed quantity of metal at a set price. In the present bull market most of these hedge contracts have a negative mark to market value - that is, they involve selling metal at a lesser price than the prevailing price.
Unhedged producers that sell some or all (tho can't believe anyone would be selling all) their metal into the spot market have the advantage of being exposed to rising prices. Their disadvantage would be when the market turned sour and their profits reduced commensurately.
Producers will opten mix and match some of these options in order to "balance" their market risk. For example, recently a gold miner (Croesus) has been unable to satisfy its hedge commitments and is presently under administration because it does not have the finances to buy its way out of its bind. Croesus had the double problem of poor forward prices in a rising market, and inability to meet contracted quantities for delivery.
This may not answer your question, Kipp, so you might want to use the above info to rephrase it.
Thanks for the reply Rob. Yes, I am aware of choice of selling unhedged vs. hedged. No worries, that is not my quesiton here.
If a producer is selling metals at LME prices, what prices would be received for metal sold over the weekend? Or is the answer the fairly obvious one, that NO metal is traded over the weekend but rather stockpiled till the LME markets open Monday (though mines/smelters are in production).
My question is just one of academic interest, not of any great importance.
rederob
12th-August-2006, 11:53 AM
Kipp
You have arrived at the correct answer: LME is not open over the weekend.
However, trading is not confined only to what is produced: And what is produced is not necessarily sent to spot for sale - it also accommodates hedges or long term contracts.
In other words, a producer may not be able to sell any of its product to spot because it is already commited, ie "sold".
Therefore, when metals prices go into "backwardation" (spot prices higher than future prices), produces ramp output to sell excess production into spot in order to take advantage.
YOUNG_TRADER
12th-August-2006, 01:28 PM
Would appreciate a post of LME Stock levels please :)
NettAssets
12th-August-2006, 02:05 PM
Thanks for the reply Rob. Yes, I am aware of choice of selling unhedged vs. hedged. No worries, that is not my quesiton here.
If a producer is selling metals at LME prices, what prices would be received for metal sold over the weekend? Or is the answer the fairly obvious one, that NO metal is traded over the weekend but rather stockpiled till the LME markets open Monday (though mines/smelters are in production).
My question is just one of academic interest, not of any great importance.
The LME contracts are also for delivery within 3 months- so when a supplier enters a contract he doesn't need the truck parked out the back. So I would think mining, delivery and supply would all occur 7 days a week, just the paperwork kept to weekdays.
michael_selway
12th-August-2006, 03:01 PM
Would appreciate a post of LME Stock levels please :)
Supplies went up a bit for zinc, but copper oh my!
thx
MS
rederob
12th-August-2006, 03:27 PM
LME stock levels at close yesterday:
tour
16th-August-2006, 09:57 AM
hi.
Hmmm i was just wondering why there is no inventory out for copper? its being incresing every since. and today another 1000+
thxs
michael_selway
16th-August-2006, 10:09 AM
hi.
Hmmm i was just wondering why there is no inventory out for copper? its being incresing every since. and today another 1000+
thxs
Dude yeah 2000+ "in" for copper yesterday
http://img59.imageshack.us/img59/4737/lmenr5.jpg
thx
MS
Kipp
16th-August-2006, 12:17 PM
This is strange, while there was a large sized add in halting the total zinc stock level just above 200kt's, the On Warrant Figure has dropped down to 145kt's from 155kt's last week,
LME Warehouse Stocks 17 Jul 2006
Close In Out +/- On Warrant Cancelled
Zinc 202700 3550 1425 2125 145075 57625
Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations. "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand? MS are you still expecting LME to be out of stock by Sept-Oct?
michael_selway
16th-August-2006, 12:29 PM
Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations. "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand? MS are you still expecting LME to be out of stock by Sept-Oct?
Hi Not Sep-Oct, by the end of the year or next
thx
MS
rederob
16th-August-2006, 12:34 PM
Hmmm... looks like most of the metal to leave the LME in the last month has just been cancellations. "On warrant" sitting steady today 16th Aug at 145K.
Is supply catching up with demand? MS are you still expecting LME to be out of stock by Sept-Oct?
Kipp
Based on trend I expect a minimum of 120 trading days before we see zinc around 10,000 tonnes at LME.
What will happen when we get below 50,000 tonnes is that the rate of decline slows as prices increase, and this equation prevents a drying up of inventory as it makes more sense to deliver any surplus metal to LME spot than hold on site.
In any event, investors that do not have a major zinc producer in their portfolio will miss out on some good returns in the next 12 monhts.
Kipp
22nd-August-2006, 10:09 PM
Kipp
Based on trend I expect a minimum of 120 trading days before we see zinc around 10,000 tonnes at LME.
What will happen when we get below 50,000 tonnes is that the rate of decline slows as prices increase, and this equation prevents a drying up of inventory as it makes more sense to deliver any surplus metal to LME spot than hold on site.
In any event, investors that do not have a major zinc producer in their portfolio will miss out on some good returns in the next 12 monhts.
Hey Rob- could you please post your nice LME sheet to see where the Zinc supplies are at? I'm keen to see if it has breached 140K yet or if the declines are just cancelled stock getting shipped out.
Though I find it hard to doubt your bullish opinion on Zinc after you called the Nickel shots so well. Screaming towards $15/lb tonight.... can Zinc do the same?
Thanks.
K
There you go Kipper ;) http://www.basemetals.com/
Or try the one that has inventories alone:
http://www.basemetals.com/stocks.aspx
rederob
22nd-August-2006, 11:33 PM
Kipp
The above link is effectively to 2-day-old data, so latest data shows that Zinc actually declined in headline terms by 625 tonnes last night, and open tonnage sits smack on 145k tonnes.
Great news was over 6,500 tonnes of cancellations yesterday, so withdrawals should remain robust for at least the next fortnight.
michael_selway
23rd-August-2006, 12:29 AM
Hey Rob- could you please post your nice LME sheet to see where the Zinc supplies are at? I'm keen to see if it has breached 140K yet or if the declines are just cancelled stock getting shipped out.
Though I find it hard to doubt your bullish opinion on Zinc after you called the Nickel shots so well. Screaming towards $15/lb tonight.... can Zinc do the same?
Thanks.
K
Hi Kipp as YT/red has said, can see breakdown below
You can see the 'ins" come in very often and in relatively big amounts, so a price fall coudl happen any time, when the "fake buying" or cancellation stops?
MS
You keep mentioning "fake buying" of metals.
I have seen nothing to indicate it exists on LME having followed it for about 5 years now.
Can you please provide some examples.
Kipp
23rd-August-2006, 01:05 PM
Thanks fellas,
I find short-term analysis of the LME stocks difficult because Cancellations occur fairly sporadically (as opposed to "Ins" which seem more frequent- though far smaller in terms of tonnage). Possibly this is caused by the high spot prices. Zinc consumers wait till the last minute to place orders (in the hope that there will be a fall in the meantime?)
Disclaimer: my viewpoints/opinions expressed on the LME/commodities are worth only about 30% of Rederobs and 50% of YT's (though maybe the same as MS... ;) )
dj_420
24th-August-2006, 04:24 PM
Sorry guys had this in CBH thread but prob is much more relevant here
China's Zinc Demand to Increase 56% by 2010, Antaike Forecasts
By Chia-Peck Wong
Aug. 24 (Bloomberg) -- The demand for zinc in China, the world's biggest consumer of the metal, may rise 56 percent by 2010, Beijing Antaike Information Development Co. has forecast.
The country may need 4.8 million metric tons of zinc by the end of the decade, from 3.08 million tons in 2005, as it requires more of the metal to coat steel to prevent corrosion, Feng Juncong, a senior analyst at Antaike, a research agency that advises the government, said yesterday at a conference.
``As China's construction and transportation sectors grow, consumption has entered its peak growth rate,'' she said in a presentation in Inner Mongolia, a region in western China.
Zinc prices in London have surged 75 percent this year and reached a record $4,000 a ton in May on expectations China's expanding economy will require more metals, while smelter output in China has been stymied by a lack of mined material.
``China will definitely need to rely on imports to fulfill its annual needs'' in the next few years, said Feng, who has been tracking the industry for 12 years and correctly forecast China would become a net importer of refined zinc in 2004.
The domestic supply of mined zinc is likely to lag behind demand by more than 10 percent this year, pushing up concentrate prices, she said. She didn't provide an estimate of China's zinc production in 2010, saying that the country is likely to remain a net importer till then.
This year, China's net imports of zinc products, including mined output, or so-called concentrates, are likely to be stable at 860,000 tons, little changed from last year, as higher internationally-traded prices led Chinese smelters to export more, she said.
Record Forecast
Zinc prices in London, which have fallen about 16 percent from their record, are likely post a new peak in the fourth quarter as stockpiles continue to dwindle, Feng said.
``The fundamental demand and supply factors are still good,'' she said, without forecasting how high prices may rise.
Zinc stockpiles at warehouses monitored by the London Metal Exchange have plunged 55 percent this year to 179,175 tons as of yesterday, the lowest since early 1992.
China's lead consumption may surge 43 percent to 2.3 million tons in 2010 as demand from lead-acid battery makers soars 65 percent to 1.79 million tons, Feng said.
The forecast is ``definitely conservative as over the past 10 years, apparent consumption in China has grown 20 percent every year,'' she said.
Industry consultants including Michael Komesaroff said that developing Inner Mongolia's lead and zinc resources may help China reduce its dependence on imports.
`Own Resources'
``China will prefer to develop its own resources rather than buying from overseas,'' Komesaroff, managing director of Urandaline Investments Pty., said by phone from the northeastern Australian state of Queensland on Aug. 21.
Inner Mongolia is ``highly prospective'' in terms of lead and zinc, he said.
Of the 1.82 million tons of zinc concentrate produced in China last year, 15 percent came from the autonomous region of Inner Mongolia, making it China's third-biggest producer after Yunnan and Gansu, Feng said.
The region ranked as China's top producer of mined lead last year, accounting for 15 percent of total output of 630,000 tons, she said.
There are other advantages exploring for lead and zinc in Inner Mongolia, which possesses China's second-biggest resources of both metals, as many deposits also contain other metals such as silver, she said.
Inner Mongolia's government plans to spend 2 billion yuan ($251 million) in the next five years to explore for mines, Zheng Fanshen, vice director and general engineer of the region's prospecting and exploitation bureau, told reporters at the conference yesterday. Coal was the first priority, and base metals such as copper, lead and zinc the second, Zheng said.
To contact the reporter for this story: Chia-Peck Wong in Inner Mongolia at cpwong@bloomberg.net
Last Updated: August 23, 2006 21:35 EDT
kennas
24th-August-2006, 04:33 PM
Thanks for the article Cath (ers)
There's no doubt China is a hungry dragon. Still, the US link to it's short term prosperity is important and any consumption out past 2010 is going to rely on the US not imploading. Let's hope.
Let's also hope China don't find too many resources in the own back yard and keep buying from Australia....
michael_selway
24th-August-2006, 06:17 PM
Sorry guys had this in CBH thread but prob is much more relevant here
China's Zinc Demand to Increase 56% by 2010, Antaike Forecasts
By Chia-Peck Wong
Aug. 24 (Bloomberg) -- The demand for zinc in China, the world's biggest consumer of the metal, may rise 56 percent by 2010, Beijing Antaike Information Development Co. has forecast.
To contact the reporter for this story: Chia-Peck Wong in Inner Mongolia at cpwong@bloomberg.net
Last Updated: August 23, 2006 21:35 EDT
Thx, but thing is Demand is only one side of the equation
Eg. what do u think will happen to the Zinc Price if:
"China's Zinc Demand to Increase 56% by 2010, Antaike Forecasts, but World Supply likely increase 60% by 2010"
thx
MS
YOUNG_TRADER
25th-August-2006, 10:57 AM
LME Warehouse Stocks 24 Aug 2006
Close In Out +/- On Warrant Cancelled
Copper 124325 1775 100 +1675 113625 10700
Zinc 178450 0 725 -725 137550 40900
Getting close to coppers levels :D
michael_selway
25th-August-2006, 11:29 AM
LME Warehouse Stocks 24 Aug 2006
Close In Out +/- On Warrant Cancelled
Copper 124325 1775 100 +1675 113625 10700
Zinc 178450 0 725 -725 137550 40900
Getting close to coppers levels :D
wow a ****load of zinc got cancelled! nice ;)
thx
MS
kennas
25th-August-2006, 11:38 AM
What does that effectively mean MS?
michael_selway
25th-August-2006, 12:07 PM
What does that effectively mean MS?
Alot of Zinc was Sold overnight ie On Warrant decreased by about 8000 tonnes
thx
MS
rederob
25th-August-2006, 01:16 PM
Alot of Zinc was Sold overnight ie On Warrant decreased by about 8000 tonnes
thx
MS
MS
You are a worry!
The zinc was sold a long time ago.
What has happened is that warrants have been exercised - ie cancelled - and buyers have chosen to take delivery of the metal.
Accordingly, that metal will be moved out of the various warehouses in days/weeks to come, and land in the laps of typical consumers.
I am still waiting for MS to respond to his "fake buying" claim, made a few days ago: Willbe interested to understand where/how this happens.
YOUNG_TRADER
30th-August-2006, 12:57 PM
LME Warehouse Stocks 29 Aug 2006
Close In Out +/- On Warrant Cancelled
Zinc 176700 350 1800 -1450 136425 40275
michael_selway
1st-September-2006, 11:53 PM
MS
You are a worry!
The zinc was sold a long time ago.
What has happened is that warrants have been exercised - ie cancelled - and buyers have chosen to take delivery of the metal.
Accordingly, that metal will be moved out of the various warehouses in days/weeks to come, and land in the laps of typical consumers.
I am still waiting for MS to respond to his "fake buying" claim, made a few days ago: Willbe interested to understand where/how this happens.
Hi Red
Basically Nickel "ins" are frequent as you can see, unlike zinc
Put simply, if there are frequent "ins" why is there still alot of "cancellatons"?
Wouldnt it be wise to buy it from the "ins" before they enter LME as "ins", than by jacking up the price by buying the "Open", ie already at LME?
In other words, someone is trying to jacking up the price, but the outside underlying demand/supply is actually in surplus, since theres frequent "ins' atm
thx
MS
rederob
2nd-September-2006, 12:08 PM
Hi Red
Basically Nickel "ins" are frequent as you can see, unlike zinc
Put simply, if there are frequent "ins" why is there still alot of "cancellatons"?
Wouldnt it be wise to buy it from the "ins" before they enter LME as "ins", than by jacking up the price by buying the "Open", ie already at LME?
In other words, someone is trying to jacking up the price, but the outside underlying demand/supply is actually in surplus, since theres frequent "ins' atm
thx
MS
MS
You must get a grip on how the market works.
In a balanced market the LME plays little more than a "price setting" role for the global base metals community.
That's because the LME will soak up excess metal supply and store it until demand perks up.
Most metal (even today) continues to avoid the LME because it is shipped, typically, from producer to consumer on long term supply contracts.
By following the inventory totals of respective base metals on LME one can determine when supply or demand are waxing or waning. These fundamentals determine whether or not a metal's price will strengthen (via greater metal demand) or weaken (via excess metal supply).
Base metals have been experiencing strong demand in recent years, and their prices have risen markedly.
Respective markets determine a "balancing point", whereby inventory level changes turn into price pivot points via the difference between 3 month future and spot metal prices.
Let's look at copper as a recent example: Prior to its May selldown its backwardation stretched to well over $200/tonne (presently around $20), and its relative strength spun out to an incredible 88 points. Backwardation was doing its job in getting more metal onto inventory, to the point that supply side issues were being addressed and the market determined that copper prices had peaked for the time being. Copper continues to be in backwardation and apart from deliveries into Asian warehouses, there is very little available "free" metal elsewhere in the world.
Copper has had lots of "ins" since May, and only slightly less "cancellations" because the supply/demand equation is fractionally favouring "supply".
Nickel has been different in that the equation has favoured "demand".
Zinc is in a separate league, in that flows in to LME warehouses are infrequent, but usually huge (by comparison with other metal percentage movements). "Outside" activity has been robust throughout this year, and for this reason I believe we are soon to see a huge upside movement in zinc's price: Markets will realise that there is no meaningful supply-side response and backwardations will become the metal's norm in order to rebalance the ledger.
MS, your point about buying nickel from the "ins" before they enter LME as "ins", is valid, but ignores the profit motive available via the market mechanism of backwardation. (It's valid as Oxiana is selling some of its copper cathode direct to nearby Asian markets at premium well above LME spot - but examples like this are not common.)
It is a very simple process for a seller to deliver to LME at spot: The location is known, delivery arrangements are straightforward, and the commerce is reliable.
Whereas for a consumer to pre-empt demand, and then find a producer willing to ship to them in the desired quantity, and at a premium acceptable to the seller, is relatively complex.
In times of tight demand LME warehouses provide a rational, reliable, well regulated basis for purchasing metals.
nizar
2nd-September-2006, 01:40 PM
Rederob,
Thanks for your reply
It shows your knowledge on these matters and u are truly an asset to this forum
All the best
comptec
8th-September-2006, 01:36 AM
woohooo go AIM :) excellent looking increase on Thursday
dubiousinfo
8th-September-2006, 06:48 AM
Rederob,
Thanks for your reply
It shows your knowledge on these matters and u are truly an asset to this forum
All the best
:iagree:
want-cash
8th-September-2006, 09:10 PM
If you want to invest in zinc look no further than AIM resources this baby is set to soar, 26 percent increase yesterday, with volume skyorcketing to over 20 million today. This stock is way undervalued look out for it , it's a strong buy!
pacer
8th-September-2006, 09:35 PM
recon it will fall on monday...they usualy do....26% is too much for one day...wait then hit hit it again. IDNH.....I do not hold.
Fab
13th-September-2006, 08:55 AM
:mad: It won't be a good day for zinc today on the asx . Drop 5% overnight
michael_selway
24th-September-2006, 12:56 PM
:mad: It won't be a good day for zinc today on the asx . Drop 5% overnight
Metal temporarily "vanishes" in LME warehouse merger
By Nick Trevethan
396 words
23 September 2006
02:33
Reuters News
English
(c) 2006 Reuters Limited
LONDON, Sept 22 (Reuters) - London Metal Exchange (LME) aluminium and zinc stocks dipped on Friday as thousands of tonnes of metal appear to have been removed from warehouses in northeast England, according to data supplied by the LME.
But the falls -- 4,500 tonnes of zinc and 4,225 of aluminium, held in warehouses in Newcastle and Sunderland, were just part of the exchange's attempts to merge the two reporting locations into one.
"This isn't correct. It doesn't reflect the real world and potentially causes a disorderly market," a trader said.
In July, the exchange said it would start to treat warehouses in Newcastle and Sunderland as the same location within SWORD -- the system that manages warrants for LME metal.
The warehouses themselves did not change and the move was purely administrative.
"This was an exceptional situation and we have informed members of what would happen," an LME spokesman said.
"There were notes on the stocks pages today and there will more on Monday explaining the transfer of these warrants from Newcastle and Sunderland to Tyne and Wear."
Warrant holders were asked to cancel and invalidate warrants for metals in Newcastle and Sunderland before close of business on 21 September.
"(This is) in order to allow...good time to recreate the warrants under the location of Tyne & Wear before...stock reporting on the 22 September thus ensuring the stock reports will accurately reflect stock holdings in Tyne & Wear.
But that meant LME stocks of zinc appeared to fall by four percent to 144,075 tonnes, while aluminium inventories seem to 693,050 tonnes.
"This is ridiculous. It creates the impression that there is less metal in the system than there actually is. The metal is still there, it has just been re-classified. I am sure this could have been done with a lot more finesse," another dealer said.
A third dealer said: "We have heard of brokers who have had complaints after trying to sell Sunderland material to their clients that doesn't exist according to the exchange data. It creates a very poor impression."
Dealers expect stocks in the new location, Tyne and Wear, to rise on Monday by about the same amount that they fell on Friday.
If you want to invest in zinc look no further than AIM resources this baby is set to soar, 26 percent increase yesterday, with volume skyorcketing to over 20 million today. This stock is way undervalued look out for it , it's a strong buy!
CBH new website have good regualr reports which not only talk about themselves, but others also!
Time Source Headline
9/20/2006 4:56:51 AM Dow Jones INTERVIEW: Australia's CBH Pre-commits To Zinc Project
By James Attwood
Of DOW JONES NEWSWIRES
SYDNEY (Dow Jones)--Confident zinc's four-year bull has much further to run, Australia's CBH Resources Ltd. (CBH.AU) is ordering long-lead items for an estimated US$100 million project ahead of a formal go-ahead decision.
A feasibility study into the Sulphur Springs project won't be ready until month-end but CBH has decided to proceed with the purchase of A$9 million in equipment, said Chairman James Wall.
"We're in the process of making a pre-commitment for ordering the sag and ball mills - they're long-lead items and in this environment you've got to get yourself in the queue," Wall told Dow Jones in an interview Tuesday.
Sulphur Springs is in Western Australia's Pilbara region, where giant iron ore expansion projects run by BHP Billiton (BHP) and Rio Tinto (RTP) are adding to the intense global competition for mining materials and labor.
After a capital investment "in the order" of US$100 million, the mine will process at least 1.25 metric tons of ore a year from 2008, churning out 75,000 tons of zinc concentrate and 65,000 tons of copper concentrate, Wall said.
But the company is also looking at a model based on 1.5 million tons throughput, thereby exceeding output at the company's only current operating asset, the Endeavour zinc and lead mine in central New South Wales state.
Sulphur Springs' logical offtaker, at least for the project's zinc concentrates, is CBH's 24.8% shareholder, Toho Zinc Co. (5707.TO) of Japan.
The commitment to order long-lead items allows the project to progress while CBH puts together a financing package over the next four to five months, Wall said.
While funds could come from an equity raising or arrangements with offtakers, debt raising is expected to play a large part.
"All those doors are open, but CBH only has A$6-7 million debt, so there's potential to do quite a lot more without affecting the gearing ratio."
But Wall said debt financing is unlikely to entail hedging.
"I'm not against buying puts at the right time in the market but I'm against selling forward the metal, which has the effect of locking you into particular prices, whereas puts are more like an insurance policy."
Zinc, used to galvanize steel, surged to an all-time high US$4,000 a ton in May before falling back into a volatile, range-bound trading pattern in recent months, prompting some to call the end of a nearly four-year uptrend.
But Wall said now is "definitely not the right time" to be buying puts, describing current base metal price weakness as "a nice little correction."
"It's early days - we're not anywhere near the top of the market in my view."
His confidence is driven by critically low, and still shrinking, global zinc stocks as years of exploration under-investment and structural expansion barriers constrain the supply side's ability to react to China-led global demand.
The bullish market view gives CBH the confidence to grow on several fronts, he said, pointing to the company's ongoing takeover of Triako Resources Ltd. (TKR.AU), whose Mineral Hill project is expected to add around 30,000 tons to Endeavour's output within 18 months.
Wall said Endeavour's throughput rate has all but recovered from a "self mining" incident last year: "In the last quarter I would anticipate we'll be back at 1.2 million tons a year."
At the same time, CBH is waiting for the New South Wales state government's nod to begin an exploration decline at its Broken Hill brownfield project. A formal decision on whether to go ahead with a new underground mine at Broken Hill is expected next year.
In total, the company is looking to reach around 300,000 tons annual production in the coming years to become Australia's third-largest zinc miner, after Zinifex Ltd. (ZFX.AU) and Xstrata PLC (XTA.LN).
-By James Attwood, Dow Jones Newswires; 612-8235-2957; james.attwood@dowjones.com
-Edited by Paul Godby
(END) Dow Jones Newswires
September 19, 2006 23:56 ET (03:56 GMT)
rederob
30th-September-2006, 08:59 AM
LME zinc inventories are declining around 1500 tonnes/day and there is about as much copper as there is zinc presently in their warehouses.
However, copper inventories have been relatively static.
October will herald in a massive price breakout for zinc, on trend, and we should look to a 30% price rise before end of year.
If zinc follows copper's early year lead, then a 100% price increase is on the table within 6 months.
Zinc-based equities will be the best performers in the last quarter of this year or my name is MUD.
tasmanian
30th-September-2006, 09:04 AM
i think you could be right there rederob.
the rate zinc is going there will be no stockpile left by the end of this year
cheers
kennas
30th-September-2006, 09:53 AM
LME zinc inventories are declining around 1500 tonnes/day and there is about as much copper as there is zinc presently in their warehouses.
However, copper inventories have been relatively static.
October will herald in a massive price breakout for zinc, on trend, and we should look to a 30% price rise before end of year.
If zinc follows copper's early year lead, then a 100% price increase is on the table within 6 months.
Zinc-based equities will be the best performers in the last quarter of this year or my name is MUD.
What are your top picks rederob?
Kipp
30th-September-2006, 12:28 PM
LME zinc inventories are declining around 1500 tonnes/day and there is about as much copper as there is zinc presently in their warehouses.
However, copper inventories have been relatively static.
October will herald in a massive price breakout for zinc, on trend, and we should look to a 30% price rise before end of year.
If zinc follows copper's early year lead, then a 100% price increase is on the table within 6 months.
Zinc-based equities will be the best performers in the last quarter of this year or my name is MUD.
Rob, you called the Nickel price blowout to perfection, so it's very hard for me to doubt your opinions now. How long will we see Zn above 1.50? For all of 2007? Or at least FY07?
YOUNG_TRADER
30th-September-2006, 12:31 PM
LME Warehouse Stocks 29 Sep 2006
Close In Out +/- On Warrant Cancelled
Copper 117575 500 4300 -3800 106900 10675
Zinc 140375 0 1825 -1825 110775 29600
There is currently about 4kt more zinc on warrant than copper, freaky!
Long live Zinc the metal for 2006 :D
michael_selway
30th-September-2006, 12:35 PM
Rob, you called the Nickel price blowout to perfection, so it's very hard for me to doubt your opinions now. How long will we see Zn above 1.50? For all of 2007? Or at least FY07?
Rederob called Nickel yeah, but Nickel is a bit diff to zinc, more speculative i think as funds "fake buy" to jack up the price. Too much regular "ins" still
http://img225.imageshack.us/img225/259/lmexc2.jpg
Zinc on the other hand has hardly any "ins" (none if you see above) but cancellations on the increase!
Yeah btw Red, which Zinc shares u think will rise the most at current prices?
thx
MS
nizar
30th-September-2006, 01:35 PM
For what its worth, i reckon the zinc spike to will see it go to us$2.00/lb++ maybe 2,20 or 2,30 who knows. This will probably happen between january-february next year. Then it will ease to maybe 1.80-2.00 and stay there until the end of the year (2007). No significant new supplies will come next year for zinc.
As to which stocks, CBH "seems" a standout to some people, but remember market sentiment towards this stock aint all that great. For some reason people think CBH will rally the most because it hasnt been going anywhere and has been underperforming other zinc stocks. (It has a good reason for that). This, IMO, is FLAWED REASONING. A stock that has been going up is more likely to keep going up then one that has been in a downwards/sideways trend. Its called MOMENTUM. That being said, if i was gonna buy CBH i would wait for the next 2 weeks when TKR holders dump on market. Sulfur Springs will be a beauty.
ZFX mine life problems but still may rally, but i think KZL will be the one that fires the most. With Thalanga from 2007, and Mungana from 2008, they have by far the best pipeline of growth compared to ZFX. Plus u can exploration upside from Admiral Bay. Consensus is 4x increase in NPAT from FY06 to FY07, but how about if Cu stays the same and Zn rockets? .. :D
FY08 earnings estimates much less, but if production increase will more than offset any fall in metal prices, which i believe will, then this will be higher still than 2007.
KZL's NPAT this year was achieved with us$1.00/lb zinc and us$2.07/lb copper being the average prices acheived. ANd dont forget about their 17% stake in MLM
In terms of profits, ZFX is the most sensitive to movements in the zinc spot price. BUt due to market sentiment about century's mine life, in terms of sp appreciated, it MAY be limited, but a $2/share divvy is looking likely.
I dont know the order but with CBH, ZFX and KZL, IMO u cannot go wrong... :2twocents
Though its a spec, and wont start production until June 2007, AIM could be the darkhorse.
rederob
30th-September-2006, 01:43 PM
K
kennas/MS
My zinc tips are present producers; ZFX, KZL and, with a twist, OXR via Golden Grove (partly because lead prices are also due to kick strongly north).
I think zinc oriented equities will generally do well, but the larger producers are making "real" profits.
Kipp
I think the 5 month consolidation phase for zinc is about to end very soon and quite abruptly.
$1.50 is likely to become long term "support" to zinc prices, and do not be surprised to see the number 3 in front of the price per pound next year.
MS, btw I think your "fake buy" talk is plain silly and does you no favours.
Zinc and nickel have an extraordinary amount in common. In particular, they add to the price and "value" of steel-based products, yet contribute only a small part to the total price.
As we go forward it is not impossible to see zinc well and truly surpass copper prices and, dare I say, rival nickel. Nickel can be substituted, but zinc has qualities that make substitution less practical.
nizar
30th-September-2006, 01:58 PM
$1.50 is likely to become long term "support" to zinc prices, and do not be surprised to see the number 3 in front of the price per pound next year.
Wow good to see you super bullish!
YOUNG_TRADER
3rd-October-2006, 09:44 AM
LME Warehouse Stocks 02 Oct 2006
Close In Out +/- On Warrant Cancelled
Copper 116875 300 1000 -700 106750 10125
Zinc 139125 0 1250 -1250 109425 29700
YOUNG_TRADER
4th-October-2006, 10:37 AM
LME Warehouse Stocks 03 Oct 2006
Close In Out +/- On Warrant Cancelled
Copper 116850 0 25 -25 105950 10900
Zinc 138375 300 1050 -750 105525 32850
Less Zinc on warrant than there is Copper!
Fab
7th-October-2006, 09:12 AM
Did I read well on my commsec account today that Zinc went up 3% overnight. I suppose this should be great opening for share such as ZFX on monday :)
rederob
7th-October-2006, 11:29 AM
Did I read well on my commsec account today that Zinc went up 3% overnight. I suppose this should be great opening for share such as ZFX on monday :)
Actually up 6.3cents so closer to a 4% rise overnight.
As good news was the decline in warehouse stock and a warrant cancellation percentage approaching one third of total metal available.
This can only mean zinc prices will go crazy as the rate of attrition has been maintained for weeks on end and cancellations have been increasing.
michael_selway
7th-October-2006, 12:39 PM
Actually up 6.3cents so closer to a 4% rise overnight.
As good news was the decline in warehouse stock and a warrant cancellation percentage approaching one third of total metal available.
This can only mean zinc prices will go crazy as the rate of attrition has been maintained for weeks on end and cancellations have been increasing.
Yep, on warrant about to breach the 100k mark
Btw Red, what do u think of Lead atm? maybe "fake buying" from funds or is it genuine demand / supply?
Btw Red, what do u think of Lead atm? maybe "fake buying" from funds or is it genuine demand / supply?
thx
MS
MS
As I don't know what "fake buying" is on the LME (because it's not possible), I can't answer that part of your question.
The funds seldom take delivery, unless they get caught out and have to cover a position.
It's easy to determine genuine supply/demand as the data trends are transparent.
In the case of lead, exceptional demand is occurring and supply cannot be met.
Lead is often seen as a laggard, drags the chain, don't go overweight there!
However, the present trend suggests we are likely to see it hit a new high within the month.
Then again, I suspect zinc will be there first, and maybe nickel after that.
Copper and ali are treading water, by comparison.
Bottom line as far as I am concerned is that the commodities boom is have a good tilt at new highs before year end.
I reserve judgement on 2007.
Kipp
10th-October-2006, 01:53 PM
MS
As I don't know what "fake buying" is on the LME (because it's not possible), I can't answer that part of your question.
.
Possibly MS's term "fake buying" refers to speculative buying of commodities (as opposed to Zinc consumer (Maunufacturers etc)... that is my interpretation anyway. Whilst such buying could not be really be dubbed "fake" I agree with MS that spec is worth considering if it is what is driving the Zn shortage (as at any point spec buyers can dry up, as opposted to industry)... in any event... inventories are plummeting at a good rate now (down from 148K approx 2 months ago... thought I'm the first to admit I though tthey had plateaued back in August).
<p>
Rob... was is your thoughts on PEM... they don't get much coverage on the ASF. Pretty much just another Zinc play like any other?
rederob
10th-October-2006, 02:25 PM
Possibly MS's term "fake buying" refers to speculative buying of commodities (as opposed to Zinc consumer (Manufacturers etc)... that is my interpretation anyway. Whilst such buying could not be really be dubbed "fake" I agree with MS that spec is worth considering if it is what is driving the Zn shortage (as at any point spec buyers can dry up, as opposed to industry)... in any event... inventories are plummeting at a good rate now (down from 148K approx 2 months ago... thought I'm the first to admit I though they had plateaued back in August).
<p>
Rob... was is your thoughts on PEM... they don't get much coverage on the ASF. Pretty much just another Zinc play like any other?
Kipp
PEM is hedged for near half their production this year (see p.63 of PEM Annual Report) at below AU$3000/tonne while our prevailing spot prices are at least AU$1500/tonne greater.
I think PEM is a good equity, but I would rather have money on an unhedged producer like KZL or ZFX in this environment.
In relation to "fake buying", if inventories are declining then buying must be real (speculators do not go through the trouble of buying, taking delivery, storing, and re-selling: or they would not be speculators!).
I have another buy order on ZFX today, and will go "at market" if it is not filled before close today.
Zinc is getting seriously tight and consumers will start to hunt around the globe for it in a few months time.
michael_selway
10th-October-2006, 07:15 PM
Kipp
PEM is hedged for near half their production this year (see p.63 of PEM Annual Report) at below AU$3000/tonne while our prevailing spot prices are at least AU$1500/tonne greater.
I think PEM is a good equity, but I would rather have money on an unhedged producer like KZL or ZFX in this environment.
In relation to "fake buying", if inventories are declining then buying must be real (speculators do not go through the trouble of buying, taking delivery, storing, and re-selling: or they would not be speculators!).
I have another buy order on ZFX today, and will go "at market" if it is not filled before close today.
Zinc is getting seriously tight and consumers will start to hunt around the globe for it in a few months time.
hi red what do u think of CBH, are they unhedged also?
yeah ZFX and KZL, are defintely good zinc companies, zfx will also pay good franked dividends
thx
MS
2020hindsight
10th-October-2006, 07:16 PM
Johnny found a gold pan lying near a stream
Johnny shook some mud around and thought he saw a gleam
Pulse became a Latin dance and life a grinning dream
Since then Johnny's featured... in a mental health scheme
Double check the barricades and lock the little lever,
A most familiar case of the gold bloody fever..
John gets well pronounces "hell, I'll change my tune to zinc"
wrote out IOU's till he'd run right out of ink
dumped it on the ASX and bought his wife a mink
then the ASX went mad, ....and back came Johnny's blink ;)
Straight jacket over here he's singing like a diva
the first of many cases of the zinc bloody fever.
THAR'S ZINC IN THEM THAR HILLS!! IM OFF!!
Just to confuse you here's a quote that I don't understand either ...Kin Hubbard: It's pretty hard to tell what does bring happiness. Poverty an' wealth have both failed ;)
rederob
10th-October-2006, 10:00 PM
2020
The Tooth Fairy brings happiness, or was that the stork?!?!?
MS
CBH is totally unhedged.
There are many good zinc equities - but when the prices are at their highest, always buy the biggest unhedged producers in preference.
ZFX 70cent ff div coming soon and there might be a run on it in the next few days.
nizar
10th-October-2006, 11:01 PM
hi red what do u think of CBH, are they unhedged also?
I realise this question wasnt directed at me but ill take a stab.
I reckon CBH has massive potential but poor market sentiment is really hurting it at the moment.
I will buy it when:
*Endeavour 100% production is confirmed
*Sulfur Springs BFS results are released (these should be a beauty)
And the price is above 59c so no more overhead resistance and is into blue skies.
Endeavour's zinc production is 125ktonnes per year. Makes KZL look very ordinary.
ned1
10th-October-2006, 11:06 PM
Hi Nizar
You say that you won't get back in to CBH until it passes 59c. How far do you think it will run once it passes this resistence?
nizar
10th-October-2006, 11:16 PM
Hi Nizar
You say that you won't get back in to CBH until it passes 59c. How far do you think it will run once it passes this resistence?
After 59s is broken it will be in blueskies and i think it will really go hard. Its hard to quantify exactly a dollar figure.
Well since i am anticipating a massive run in the zinc spot price which will be massive. They are forecast to earn 12cps at current zinc prices. When the market starts looking at their growth profile with sulfur springs and broken hill and zinc spot starts firing, $1-$1.50 is not unreasonable in the next 3-6months in my opinion.
I dont hold this one.
rederob
10th-October-2006, 11:19 PM
Endeavour's zinc production is 125ktonnes per year. Makes KZL look very ordinary.
Are you sure?
?
Contained zinc versus zinc concentrate!
nizar
10th-October-2006, 11:19 PM
Zinc Rises a Fourth Straight Day; Supply Growth May Lag Demand
By Chia-Peck Wong
Oct. 10 (Bloomberg) -- Zinc rose for the fourth straight day in London on forecasts that supply may not grow quickly enough to meet rising demand from steelmakers.
Prices of the metal, used to galvanize steel, have almost doubled this year after inventories fell 66 percent as zinc miners didn't increase production fast enough.
``It's quite possible we will see even higher prices in the short term,'' Stephen Briggs, analyst at Societe Generale, one of 11 companies that trade on the floor of the London Metal Exchange, said in a presentation today.
Zinc for delivery in three months rose $20, or 0.6 percent, to $3,670 a metric ton at 1:22 p.m. in London. Prices have gained 11 percent since Oct. 4.
Stockpiles of the metal fell for the 11th straight day to 133,475 tons, the exchange said today in a daily report. Global supply of refined zinc is likely to lag behind consumption by 420,000 tons this year, Briggs said.
Supply will continue to remain short of demand next year, Merrill Lynch & Co. analyst Francisco Blanch said in a report dated yesterday.
Copper fell $45, or 0.6 percent, to $7,405 a ton on the LME. Stockpiles of copper tracked by the exchange increased 325 tons to 114,025 tons, according to the exchange.
Copper for December delivery fell 4.20 cents, or 1.2 percent, to $3.371 a pound on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.
michael_selway
11th-October-2006, 12:29 AM
Are you sure?
?
Contained zinc versus zinc concentrate!
Hi Red
Whats thes the difference?
Also ZFX produces 547k tonnes per yr if you see below, but is this contained zinc or zinc concerntrate?
Hi Red
Whats thes the difference?
Also ZFX produces 547k tonnes per yr if you see below, but is this contained zinc or zinc concerntrate?
thx
MS
The difference is significant as the concentrate cannot be 100% zinc: Like drinking scotch and water, or scotch!
The chart above needs to be updated, especially with respect to KZL.
An important aspect the chart misses is "profit margin"; why is CBH not outperforming?
kennas
11th-October-2006, 08:39 AM
DJ FOCUS:Zinc May Hit Record As Stocks Fall, Specs Stay Put 10/10/2006 06:55PM AEST
By James Attwood
Of DOW JONES NEWSWIRES
SYDNEY (Dow Jones)--The price of zinc may hit new record highs short term as global stocks of the galvanizing metal continue to shrink and investor flows into metal markets prove more resilient than expected, analysts said this week.
Since surging to an all-time high of $4,000 a metric ton in May this year, as speculative activity amplified a tightening fundamental picture, zinc has fallen into a volatile trading pattern in line with other commodities.
But even as some analysts argue the current volatility is a sign the base metals complex has started a cyclical downtrend after years of rising prices, zinc's supply and demand equation continues to improve.
Current levels of London Metal Exchange zinc stocks have plummeted from 393,300 metric tons at the start of 2006 to 15-year lows of around 135,000, representing just a week of global consumption, as producers struggle to catch China-led demand.
Total stocks - including around 250,000 tons of producer stocks and 100,000 tons of consumer stockpiles - amount to 3.1 weeks of consumption, a level that is "sub-critical," according to CRU analyst Graham Deller.
The tight supply situation is yet to reach the critical levels currently being experienced in the nickel market where stocks equal just 1.5 days of consumption and prices of the stainless steel ingredient continue to strike all time high levels.
However, zinc warehouse inventories are shrinking at an average rate of 1,440 tons a day, putting stocks on track to reach 1.5 days of global consumption, or about 45,000 tons, in the middle of January 2007.
"This figure (1.5 days) is approximately the same level at which nickel stocks are currently, and we have seen the effect that this level of tightness has had on prices," said Standard Bank.
Other analysts note that zinc, despite a sharp correction from May's high and ongoing volatility, remains around $3,700/ton, nearly double of where it started the year and within striking distance of the $4,000 record.
"Any supply interruption will put a strain on this market since there is very little stock cover and potential for that activity to be magnified by speculators getting back into the market," said National Australia Bank minerals economist Gerard Burg.
Rising Risk Of Supply Disruptions
The risk of supply disruptions is increased by the fact that producers "are working flat out, making them more susceptible," the chief executive of Australia's Zinifex Ltd. (ZFX.AU), Greig Gailey, told Dow Jones Newswires Monday.
Macquarie Research commodities analysts agree. In a report this week, Macquarie said even a small disruption "could cause zinc to do what copper and nickel have done this year when stocks of those commodities have basically run out."
NAB's Burg expects the zinc market to remain in deficit next year and average around $3,700/ton, bucking the trend of easing tightness and prices in other base metals.
Others expect zinc to move back into balance in 2007 after three consecutive years of deficit. On such a view, Michael Cuoco of Mitsui Bussan Commodities (USA) Inc. told this week's LME Seminar that prices are expected to average $2,800/ton in 2007.
And offsetting supply risks is "the risk demand could weaken more than we have assumed in our base case, particularly with the weakness in the US construction and automotive sectors - key end-uses for galvanized steel," Macquarie Research said.
But even many of those forecasting lower zinc prices next year acknowledge the growing upside price risk created by shrinking global stocks and signs speculative money flows may be less fickle than thought.
Citigroup's current forecast is for zinc to average $2,650/ton next year, around $1,000 below current levels on the premise that investment flows won't be sustained despite positive fundamentals.
But Citigroup's global commodity analyst Alan Heap hinted the forecast may be revised.
"In the last few weeks I've become more convinced that speculative flows may prove to be more sustained than I had previously expected - that's not reflected in our price forecasts," Heap told Dow Jones Newswires.
YOUNG_TRADER
25th-October-2006, 10:20 AM
LME Warehouse Stocks 24 Oct 2006
Close In Out +/- On Warrant Cancelled
Copper 120825 8175 425 +7750 114950 5875
Zinc 117375 0 2525 -2525 86750 30625
michael_selway
25th-October-2006, 01:27 PM
LME Warehouse Stocks 24 Oct 2006
Close In Out +/- On Warrant Cancelled
Copper 120825 8175 425 +7750 114950 5875
Zinc 117375 0 2525 -2525 86750 30625
thx YT
btw which Zinc stocks do you hold atm (if u dont mind me asking)?
thx
MS
YOUNG_TRADER
25th-October-2006, 02:08 PM
None funnily enough, switched out of JML and CBH (my favourite by far) into Uraniums EVE and MTN
May do some CFD's on PEM though
michael_selway
25th-October-2006, 02:30 PM
None funnily enough, switched out of JML and CBH (my favourite by far) into Uraniums EVE and MTN
May do some CFD's on PEM though
Oh ok, im still holding ZFX, PEM, CBH, however sold out of KZL too earlly i think
But i still think theres more upside in all these zinc stocks, dont think the super spike for Zinc price has come yet
Nickel has already super spiked imo due to "fake buying" from LME. Also Nickel "on warrant" never went to 0 if i recall correctly. However i think Zinc may.
thx
MS
YOUNG_TRADER
25th-October-2006, 04:31 PM
Oh MS I forgot, I've got a decent holding of BSM will be a zinc dark horse IMO, very very cheap around $15m, see the BSM thread if your interested
Nice article
MI WEEK IN REVIEW: Zinc bulls on the front foot as buy signals accumulate
Metals Insider - 23 October 2006
MI WEEK IN REVIEW: Big sister copper may be struggling to make further upside progress, for now at least, but zinc has finally managed to de-couple itself from the red metal with the many zinc bulls finally enjoying their day in the sun.
The market spent much of last week toying with the $4,000 level but there was plenty of chatter on the London “street” about the next big number at $5,000 such is the strength of bull sentiment washing over this market right now.
Bull Drivers
Zinc is enjoying a confluence of bull signals right now. The key driver is the seemingly relentless decline in exchange inventories with draws coming through daily, zero arrivals since the first day of the current month and plenty of metal sitting in the cancelled tonnage departure lounge.
As exchange stocks dwindle, the nearby market structure is tightening. The cash-3s benchmark period ended last week valued at $35 backwardation, compared with $22.50 back the previous week and with small contango at the start of the month.
A tightening futures market structure is being mirrored in the physical market with premiums rising, particularly in regions such as Europe which are now starting to run low of LME-registered tonnage.
Underlying it all is the refined market production-consumption deficit, which the World Bureau of Metal Statistics estimated at 236,000t in the first eight months of this year.
The unlikely catalyst for last Monday's surge higher across the LME complex was tin—responding to its own supply dynamics in Bolivia and Indonesia—but zinc needs extremely little encouragement these days to rally on its own.
It notched up a massive $170 day-to-day gain on Monday, closing the day valued at $3,960. Tuesday brought the first foray above the $4,000 level—a big technical number in all sorts of ways--and it found a band of trade selling and speculative profit-taking up there.
Tuesday and Wednesday were generally down days across the metals complex, traders fretting anew about poor macro data out of the US , which has come to symbolise the general fear of slowing global economic growth as we exit this year and enter 2007.
But, as they say, you can't keep a good thing down and with everyone and his dog still friendly to this market it shrugged off the sense of disappointment that enveloped copper towards the end of last week and was back testing the sellers at $4,000 and just above on Friday morning. In the end, it couldn't get the foothold there it was looking for but the bulls won't argue with the close at $3,970—a week-to-week gain of $180 and a year-to-date gain of 108%.
There's Still Time
It seems that just about every passing day brings evidence of the pending supply-side response to the current historically high prices. Last week we got an announcement from Australian production Perilya that it is boosting production next year at its Broken Hill operations with development of a third stream of concentrates at the complex.
Another Australian company, AIM Resources, said it has raised the financing for its Perkoa mine in the African country of Burkina Faso and it will fast-track development to advance the original schedule by around a year.
In the interim the latest batch of Chinese production figures showed still-strong refined metal growth in the country.
But the bulls can blissfully ignore the building tidal wave of new concentrates supply on the argument that it is still too far in the future to make much difference today. As long as those LME stocks continue sliding towards critical levels, there is still time for zinc to finally make good on all those months of bull promise.
As one local commented last week: “With new highs being made…it is difficult to see what is going to stop this one for now. “ Indeed!
kennas
26th-October-2006, 08:15 AM
Zinc up 4% overnight.
Another great day for Zinc holders. More records to tumble I'd say, with profit taking after lunch maybe.
nizar
26th-October-2006, 09:27 AM
Oh ok, im still holding ZFX, PEM, CBH, however sold out of KZL too earlly i think
But i still think theres more upside in all these zinc stocks, dont think the super spike for Zinc price has come yet
Nickel has already super spiked imo due to "fake buying" from LME. Also Nickel "on warrant" never went to 0 if i recall correctly. However i think Zinc may.
thx
MS
wat r u doing selling KZL?? that stock is a winner... but yeh actually i sold it was well during may it feel like 30% it was a bit 2 much for me.... but bought it again 2 weeks ago at $5.95.. not planning to sell it until double digits :D
i also got CBH and that rounds out the zincers for me...
nickel never went to zero because the traders/speculators/hedge funds that were accumulating as the supplies drop are more than happy to sell it at these high prices, same thing with zinc, there is someone accumulating at these prices. I mean, if i had about 40million dollars to spare, id pick up 10,000tonnes (obviously not at one go, but maybe 1ktonne a day or a week)and sell it in 6 months, problem is id need someonewhere to store it, anybody got a huge warehouse somewhere? :D
rederob
26th-October-2006, 09:37 AM
MS
You insist on "fake buying" nonsense and have never provided a shred of evidence for it.
There is a good reason - it does not happen on the LME, just ask Liu Quibing if you are able to find him: A man who suffered the indignity of bad decisions.
I think it is important that you start to learn something if you are going to continue posting - so do yourself a favour.
While I agree that zinc has a long way to go, I also think that early speculation on nickel's demise is unwise.
Until the commodity can move from its its incredible tighness, the chance of further upside remains, and it could be significant. We just need a big adverse event from a major supplier.
I certainly do not discount nickel hitting $40k in the first quarter of 2007.
nizar
26th-October-2006, 09:53 AM
MS
You insist on "fake buying" nonsense and have never provided a shred of evidence for it.
There is a good reason - it does not happen on the LME, just ask Liu Quibing if you are able to find him: A man who suffered the indignity of bad decisions.
I think it is important that you start to learn something if you are going to continue posting - so do yourself a favour.
While I agree that zinc has a long way to go, I also think that early speculation on nickel's demise is unwise.
Until the commodity can move from its its incredible tighness, the chance of further upside remains, and it could be significant. We just need a big adverse event from a major supplier.
I certainly do not discount nickel hitting $40k in the first quarter of 2007.
LOL i dont think Liu Quibing is around anymore.
michael_selway
26th-October-2006, 10:51 AM
wat r u doing selling KZL?? that stock is a winner... but yeh actually i sold it was well during may it feel like 30% it was a bit 2 much for me.... but bought it again 2 weeks ago at $5.95.. not planning to sell it until double digits :D
i also got CBH and that rounds out the zincers for me...
nickel never went to zero because the traders/speculators/hedge funds that were accumulating as the supplies drop are more than happy to sell it at these high prices, same thing with zinc, there is someone accumulating at these prices. I mean, if i had about 40million dollars to spare, id pick up 10,000tonnes (obviously not at one go, but maybe 1ktonne a day or a week)and sell it in 6 months, problem is id need someonewhere to store it, anybody got a huge warehouse somewhere? :D
you mean you sold KZL when it was very low?
Yeah its a winner beacuse its got the best mine life out of those zinc stocks, however thus it also has a high PE
However they shoudl all rise as time comes regardless, and imo esp the low PE ones % wise
thx
MS
kennas
26th-October-2006, 10:53 AM
you mean you sold KZL when it was very low?
Yeah its a winner beacuse its got the best mine life out of those zinc stocks, however thus it also has a high PE
However they shoudl all rise as time comes regardless, and imo esp the low PE ones % wise
thx
MS
What are you holding MS?
michael_selway
26th-October-2006, 11:12 AM
What are you holding MS?
ZFX, PEM, CBH but wish i hadnt sold KZL in hindsight
So tempting to buy more still....
What zinc stocks are u holding Kennas? ;)
thx
MS
kennas
26th-October-2006, 11:19 AM
ZFX, PEM, CBH but wish i hadnt sold KZL in hindsight
So tempting to buy more still....
What zinc stocks are u holding Kennas? ;)
thx
MS
Does BHP mine zinc? :(
I sold CBH and JML a little while ago. :whip Bad kennas!
michael_selway
26th-October-2006, 11:32 AM
Does BHP mine zinc? :(
I sold CBH and JML a little while ago. :whip Bad kennas!
yes BHP does mine zinc, but its not leveraged to zinc beacuse its zinc production isnt a high % compared to the other things it mines
i.e changes in zinc price doesnt affect BHP's bottom line much
thx
MS
canaussieuck
26th-October-2006, 12:06 PM
Does BHP mine zinc? :(
I sold CBH and JML a little while ago. :whip Bad kennas!
Kennas mate....i'm stunned....i thought you would hold CBH until they ran out of zinc!
michael_selway
26th-October-2006, 12:07 PM
Kennas mate....i'm stunned....i thought you would hold CBH until they ran out of zinc!
canauss, what zinc stocks do you hold atm? ;)
thx
MS
dj_420
26th-October-2006, 12:37 PM
im holding CBH and JML
in hindsight it was a good move to get into undervalued zinc stocks about 2-3 months ago, i thought that zinc stocks would run when LME zinc supplies ran out, looks like we might get a really nice run right through till mid 2007 early 2008. and it seems that zinc is making a run early on short supply expectations.
hasnt been much coverage on JML but its been valued at 80 cents before production, leading up to production valuations will increase dramatically.
canaussieuck
26th-October-2006, 01:21 PM
canauss, what zinc stocks do you hold atm? ;)
thx
MS
Only CBH.
nizar
26th-October-2006, 03:37 PM
you mean you sold KZL when it was very low?
Yeah its a winner beacuse its got the best mine life out of those zinc stocks, however thus it also has a high PE
However they shoudl all rise as time comes regardless, and imo esp the low PE ones % wise
thx
MS
MS
I beg to differ.
KZL justifies its relatively high pe ratio because of its pipeline of growth. Thats why people are willing to pay a higher multiple for it than ZFX, for example. CBH has been crippled with problems. Look at my KZL versus ZFX post on KZL thread to know why i prefer the later even though it trades ona lower
I bought KZL at $2.45 and sold at $3.70, after it had peaked at $4.70, coz i seriously thought it would go to zero, in the end went as low as $2.89. Really got hammered those days. I got back in about 3 weeks ago at $5.95. This time i will not sell it for a while.
nizar
26th-October-2006, 03:40 PM
and it seems that zinc is making a run early on short supply expectations.
Not quite.
In MAy the LME stocks was at 250ktonnes and the price peaking at $us1.80/lb. Now its only about 5c higher at $us1.85/lb while the stocks are sitting at less than half at 115ktonnes.
The zinc price is lagging bad. Not long now before it catches up.
nizar
26th-October-2006, 05:00 PM
Are you sure?
?
Contained zinc versus zinc concentrate!
correct rederob,
endeavour at 100% produces 60ktonnes/pa of zinc metal (contained zinc)
rederob
26th-October-2006, 05:38 PM
correct rederob,
endeavour at 100% produces 60ktonnes/pa of zinc metal (contained zinc)
Cheers nizar
Just as oil has held back gold, so too has copper held back zinc.
However, at certain points in time, markets "disconnect".
That time for zinc has arrived, and LME inventories will now take the toll that previously were reflected by copper prices in the period to May this year.
Although zinc hopefuls and smaller producers will get a coat tail ride, the likes of ZFX and KZL will derive substantial profits, as will OXR from Golden Grove.
I therefore will pay little attention to daily price movements, and concentrate on the weekly numbers instead.
I suggest we look at retitling the thread to "2007", despite nickel having that tagline.
