New zinc price forecast is slightly higher at 68¢/year
Standard Chartered still sees 20% drop off 2008 zinc price
Tom Stundza -- Purchasing, 6/26/2009 9:43:09 AM
Standard Chartered analysts now expect a slight uptick in world zinc prices in 2010 as long as demand improves. The market researchers have targeted a full-year zinc price average of 68¢/lb in 2010, up from their earlier forecast of 66¢.
Even with the adjustment, the projected price average will be below the 85¢/lb in 2008 spot sales on the London Metal Exchange (LME). At midyear 2009, the LME cash price was 70¢ but most analysts, including Standard Chartered, expect slippage this summer and a 67¢ full-year zinc price average in 2009.
Standard Chartered says in a research note that "the main
supportive factor for zinc prices is that demand has clearly been improving,
albeit from a very low level. In North America,
order data is still presenting a mixed picture, with demand from steel mills
still subdued; but with destocking having been halted, the market looks close
to a turning point."
Analysts at the London-based bank add that without recent stock building by China, the zinc
market would have been badly oversupplied, and estimated that the market will
have a 373,000-metric ton surplus this year. "However, with demand likely to
improve steadily throughout the second half of 2009, we believe that the worst
period for fundamentals has already passed."
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