Thursday, April 12, 2007

What's Up with Zinc?

I like Blue Note. It is a near term producer starting up in the next month or two.

The production plan for the Cariboo Mine is:

(x'000)200720082009 20102011Total
Zinc68,105 104,467107,748107,03988,816476,175
Lead34,94657,47146,571 44,70839,804223,501
Copper 8051,2631,9051,9451,699 7,616
Silver8471,3171,055 1,0148865,119

Blue Note is ready to cash in on high zinc prices now, and it looks like their timing couldn't be better.

What's up with Zinc?

The charts below are the 24 hour spot price, the 5-year LME zinc price and the 5-year warehouse stores.


What caught my interest was the large Chinese imports of Zinc in 2005 when zinc was very cheap and then when zinc was peaking in price in Dec 06-Jan 07 the Chinese exports take off, and their large increase in exports brought the price of zinc down from its peak.


[Most Recent Quotes from www.kitco.com]




[Most Recent Quotes from www.kitco.com]




[Most Recent Quotes from www.kitco.com]





Meanwhile, there was a Shanghai exchange opened to trade zinc in March.

What's happening with the Shanghai Exchange?
On March 25th the Shanghai price for zinc was 28,510 yuan, which works out to $1.6765 US, but the LME price was just under $1.45, or almost 16% higher.

An April 5th article in the Chinadaily reports that zinc prices are around 28-30,000 yuan and that China's demand will rise about 10%.

An April 9th Bloomberg article states "Shanghai zinc for July delivery rose for a fourth day, advancing 990 yuan, or 3.2 percent, to settle at 31,950 yuan a ton. It rose by the maximum 4 percent from the morning session." That's about $1.88/lb, and about 19% more than today's LME price.

An April 10th story on Etrade said Shanghai zinc ended at 32,745, which at today's exchange of 7.7257 works out to $1.93 US/lb zinc, or about 21% more than the current 1.59/lb.

Zinc is looking good to me.

http://www.chinadaily.com.cn/bizchina/2007-04/05/content_843935.htm
http://www.bloomberg.com/apps/news?pid=20670001&refer=china&sid=ab.xX6jx.AJc
https://uk.etrade.com/e/t/uk/NewsContent_Component?ArticleId=2876744&ORIGIN=news.UKHeadlines&TITLE=
http://www.xe.com/ucc/convert.cgi
http://www.metalsinsider.com/WIR/zn260307.html

3 comments :

Jerry said...

Hey!

Got your message on Blue Note, that looks interesting. I need to read up more about Blue Note. Thanks for the heads up! How long have you been holding it for?

Deborah said...

I first saw Blue Note in January and I've picked up my holding over the past month.

Deborah said...

I found the piece I've quoted from very interesting. In March the average price for Zinc was about $1.45 or so and exports from China plummeted.

This is true supply and demand in action. Prices on the Shanghai exchange were exceeding the London exchange by a considerable margin, and the market responded.

Copper Rises for Second Day on Stockpile Concern; Zinc Gains

"Exports of zinc from China, the world's biggest producer, fell 42 percent to 33,870 tons in March from 48,260 tons the previous month, customs data showed April 23."

http://www.bloomberg.com/apps/news?pid=20602013&sid=aKBvRVXmbl4k&refer=commodity_futures