Market Briefing - May 18, 2009

Zinc prices rallied sharply in April and in the first half of May, largely a result of the speedy supply response from producers. It has also been due to the return of speculative activity of the sector, and these factors boosted the zinc price hit a 7-month high of $1,589/tonne on 7 May.

The monthly price in April picked up to $1,379/tonne, up 13.3% on the previous month, after a 9.4% m-o-m increase in March. This has occurred despite the significant weakness in demand, which served to drag prices as low as $1,060 in late February.

LME zinc stocks have trended lower from the February 25 peak of 362,275 tonnes to close to 320,000 tonnes in mid-May. This reversal of trend has partly been due to a significant supply response by producers. However, it has also been due to a surge in imports to China as a result of the government’s industry support programme, which could simply represent a shift in the surplus out of LME inventories to unreported non-LME stocks.

Narrowing surplus for Jan-Feb could grow to 260,000 tonnes for 2009 - ILZSG
ILZSG forecasts a narrowing surplus over the start of 2009, with the combined 55,900 tonne surplus for the first two months being down a significant 53.5% y-o-y. The surplus in February was just 2,300 tonnes, as against 53,600 tonnes in January.

> This article gives the introduction to our latest detailed analysis on the market. To access our latest detailed monthly report on the base metals markets plus the recent briefing update, click on the links below.

> Base Metals Market Briefing - December 9, 2008.

> Base Metals Market Briefing Update - December 16, 2008.

Disclaimer: Whilst every effort has been made to ensure the accuracy of the information used in this document, GFMS Metals Consulting cannot guarantee such accuracy and GFMS Metals Consulting does not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this information.