Zinc price high on Katrina woes

LONDON – Speculators have pushed the price of zinc, a metal used as an anti-corrosive coating, to the highest for five months anticipating that Hurricane Katrina will cause supply snags.

Slightly less than 250 000 tonnes, a quarter of the world’s commercial zinc stocks, were held in warehouses in New Orleans before the killer storm struck last Monday. Three-month London Metal Exchange (LME) zinc futures hit US$1 432,50 (about N$9 000) a tonne on Friday, up around seven percent in a week and their highest since March this year.The price has rallied on speculative buying as the fate of the New Orleans zinc, which represents nearly half the LME’s total stocks of 559 200 tonnes, remains unclear.Attractive warehouse deals and the proximity of New Orleans to the Mississippi, a major trade artery, were seen by traders as the main reasons why the pallets of zinc ingots have built up in the city, traders said.LME warehouses are approved delivery points around the world for buyers and sellers to physically exchange various metals.”The hurricane has significantly affected the zinc market.No one can confirm whether the zinc is intact, if it has been under water and so on,” one LME trader said.Another trader said: “The zinc is still there.The warehouses may have been damaged, but zinc is heavy stuff so it won’t go very far.””But the metal won’t be available for a month or two while the clear up operation goes on.””Around 47 000 tonnes were scheduled to come out.That will be delayed which could cause consumers a problem, but there are other supplies elsewhere they may be able to draw on,” he said.ZINC MAY NEED CLEANING On Wednesday the LME said metal stored in the registered warehouses in New Orleans remained deliverable, so the warrants representing it could still be traded.But the first trader said: “People were desperate to get rid of New Orleans warrants on Thursday as they know it will take time to clear up the mess.””There is a substantial risk that this material could be out of the market for a considerable period of time.It will probably need re-strapping and could also need cleaning up if it has oxidised,” he added.Global commercial stocks including LME inventories were a little over one million tonnes in June, according to latest data from the International Lead and Zinc Study Group.That is equivalent to around 35 days of global consumption.”Zinc isn’t tight like other metals are,” SG Corporate and Investment Banking analyst Stephen Briggs said.”But now we have a potentially serious development.The market is assuming that the metal is damaged and will be inaccessible for a lengthy period of time,” he said.”The consumers are assuming the worst and there is some evidence of US consumers buying.”On Friday, the LME, the world’s largest non-ferrous metals market, said it was continuing to try to assess the impact of Katrina on its New Orleans warehouses.- Nampa-ReutersThree-month London Metal Exchange (LME) zinc futures hit US$1 432,50 (about N$9 000) a tonne on Friday, up around seven percent in a week and their highest since March this year.The price has rallied on speculative buying as the fate of the New Orleans zinc, which represents nearly half the LME’s total stocks of 559 200 tonnes, remains unclear.Attractive warehouse deals and the proximity of New Orleans to the Mississippi, a major trade artery, were seen by traders as the main reasons why the pallets of zinc ingots have built up in the city, traders said.LME warehouses are approved delivery points around the world for buyers and sellers to physically exchange various metals.”The hurricane has significantly affected the zinc market.No one can confirm whether the zinc is intact, if it has been under water and so on,” one LME trader said.Another trader said: “The zinc is still there.The warehouses may have been damaged, but zinc is heavy stuff so it won’t go very far.””But the metal won’t be available for a month or two while the clear up operation goes on.””Around 47 000 tonnes were scheduled to come out.That will be delayed which could cause consumers a problem, but there are other supplies elsewhere they may be able to draw on,” he said.ZINC MAY NEED CLEANING On Wednesday the LME said metal stored in the registered warehouses in New Orleans remained deliverable, so the warrants representing it could still be traded.But the first trader said: “People were desperate to get rid of New Orleans warrants on Thursday as they know it will take time to clear up the mess.””There is a substantial risk that this material could be out of the market for a considerable period of time.It will probably need re-strapping and could also need cleaning up if it has oxidised,” he added.Global commercial stocks including LME inventories were a little over one million tonnes in June, according to latest data from the International Lead and Zinc Study Group.That is equivalent to around 35 days of global consumption.”Zinc isn’t tight like other metals are,” SG Corporate and Investment Banking analyst Stephen Briggs said.”But now we have a potentially serious development.The market is assuming that the metal is damaged and will be inaccessible for a lengthy period of time,” he said.”The consumers are assuming the worst and there is some evidence of US consumers buying.”On Friday, the LME, the world’s largest non-ferrous metals market, said it was continuing to try to assess the impact of Katrina on its New Orleans warehouses.- Nampa-Reuters