Zinc

[Huang Chung]

Base metals fans (if there are any left) might find this article on zinc of some interest.

http://www.kitco.com/ind/Lee/oct202008.html

[tobo]

this is the bit i like

"Now with prices back to the 3-year low of 70 cents/lb, (a historic low level when adjusted for inflation), the market has presented another chance to ride the secular bull in Zinc."

ToBo

[Huang Chung]

Yes Tobo, the report was a little dated, but it was more the background info that lead me to post the article.

Zinc now under US50c a lb, and 30 day LME inventories show a rise in warehouse stock levels, pointing to possibly more downside pressure on the zn price.

Significantly more zinc production to be shut down no doubt.

Now if you look at this from a glass half full perspective, we could be in for the mother of all rallies at some point in time...every chance that at some point there will be a panic that too much production has been withheld, and there bwill be a scramble to secure supply. The trick will be in the timing .

[tricha]

Yes Tobo, the report was a little dated, but it was more the background info that lead me to post the article.

Zinc now under US50c a lb, and 30 day LME inventories show a rise in warehouse stock levels, pointing to possibly more downside pressure on the zn price.

Significantly more zinc production to be shut down no doubt.

Now if you look at this from a glass half full perspective, we could be in for the mother of all rallies at some point in time...every chance that at some point there will be a panic that too much production has been withheld, and there bwill be a scramble to secure supply. The trick will be in the timing .

The way I am reading is a slow down is well underway in China, like oil, demand destruction will see China become a net exporter of Zinc again.
Predict where China is going to be in a year and you will be a winner
Unlike oil which once used is basically gone for ever, recycling as stated in your report makes a difference.

Source: International Lead and Zinc Study Group
Largest Zinc Producing Nations (tonnes)

China
2,600,000
Australia
1,380,000
Peru
1,201,794
United States
727,000
Canada
710,000
Mexico
480,000
Ireland
425,700
India
420,800
Kazakhstan
400,000
Sweden
192,400

Source: International Lead and Zinc Study Group, 2005

Largest Zinc Consuming Nations (tonnes)

China
3,047,000
United States
1,069,000
Japan
602,000
South Korea
503,000
Germany
501,000
India
394,000
Italy
373,000
Belgium
345,000
Taiwan
306,000
France
271,000

Source: International Lead and Zinc Study Group, 2005

[Huang Chung]

Tricha, the 'oil, once used, is gone forever' argument has been postponed indefinitely, in case you hadn't noticed.

[Dr_Who]

ozl are still as far as i understand cashed up..what a time to swoop on some bargains

Ozl $1.2 billion cash, but only $300m net cash, so not that much cash compare to market cap of over $3 billion.

I can see zinc going below 50 c. If zinc cant perform during the boom, why would it perform during the bust?

[Joshuatree]

Zinc prices climbing steadily anyone got a fave Zinc mining co they would like to share about; appreciate it cheers JT

[Joshuatree]

Demand to outpace supply by 2020; Zinc likely to hit $4,500 per mt: CRU
Also read Ironbark Zinc increments capital in the same webpage

According to Helen O'Cleary, analyst at CRU, the zinc prices could retouch the 2006/2007 highs.

CRU predicts that zinc demand will outpace supply by 2020, taking the prices to $4,500 per mt. However, during this year, the prices are expected to remain flat with some intermittent rallies. The CRU analyst expects the global zinc market to remain balanced in 2014. However, it may turn deficit in 2015.

The deficit in global market is expected to aggravate as fresh supplies from mines are expected to dry up over the next 5-year period. Also, the demand from Asian region excluding China will overtake Chinese demand towards the end of this decade.

The rise in zinc prices may force end-users to look for cheaper substitutes. China - the top consumer and producer of refined zinc may see rise in domestic prices during the second quarter of the year, backed by firm industrial and construction sector demand.

The Chinese decision to speed up the construction of railway tracks and highway roads may boost the domestic demand for zinc. According to Chinese customs, the country’s imports of refined zinc during the initial two-month period of the year surged higher by 84% over the previous year.

Last month, LME Zinc prices had touched one-year highs of $2,143 per tonne. The metal closed at $1,988.75 on the LME on Friday

[Daytr]

Hey JT, I have been a massive fan of zinc for the last 3 years or so, although it has taken a long to get going & the price has finally exploded & I think its quite possible it will again reach the heights we saw back in 2006 I think it was of over $4k/ton. The main reason I have been friendly to it is due to the lack of exploration & mine development in the last 10-15 years. The collapse of Pasminco & Zinafex put paid to that & then there was Western Metals as well. We looked at trying to finance a zinc mine back in 2011 & there was no way the bank credit guys would go near it & when you dug into why, it all came down to there experience with Pasminco & I think many banks are like this in regards zinc related financing. In regards the article you posted, what's the relationship between Chinese rail & zinc? There certainly is one with copper & steel etc but zinc seems a bit tenuous to me. Is it cladding for all the additional buildings etc?
Either way it was only a matter of time before demand started to outstrip constrained supply.

The difficulty is as you saying finding the right exposure. Perilya has the old Pasminco assets. I found them pretty good to deal with but that was a few years ago. Where did the Kagara zinc/lead assets end up? I did a massive zinc/lead & copper hedge back for them back in 2005.

Venturex (VXR) is a multi metal explorer who weren't that far from looking at going into production a few years ago, before prices fell back. They had a reasonable amount of zinc.

Otherwise I'm a bit out of touch to be honest, so it would be good to hear anyone else's thoughts.

[Joshuatree]

Hi guys thanks for your sharing. Yes re zinc and railways ; certainly no zinc in the lines themselves.!!

Seems a good Zinc producer is hard to find. A friend instigated the Zinc thing. A few explorers HRR,IBG,MUX he found. TZN could be a ripper if it reopens Angus mine.and the Menninnie Dam deposit largest AG-PB-ZN deposit in sth aus(haven't verified any of this)

IRON BARK IBG Citronen project (greenland)with 32% IRR op cost US.68c lb smelter fees . Capital coast $429 million22c lb (feasibility study 2013)

One would need to research long and deep.Maybe look to other countries too. cheersJT