Hind Zinc cuts rates by 6% on LME cues

Hindustan Zinc, the country's largest zinc producer, has cut its products prices by 6 per cent or Rs 9,700 effective Thursday on declining metal price on the London Metal Exchange (LME).

With the current price revision, high grade zinc at Debari (Udaipur) smelter is sold at Rs 1,58,900 a tonne, while special high grade zinc and prime western zinc at Chanderia smelter are quoted at Rs 1,59,900 and Rs 1,56,100 a tonne respectively.

The company is offering a discount of Rs 1,500 a tonne for lifting more than 9 tonnes of zinc in a calendar month. Meanwhile, zinc price on the LME has subdued by 5.81 per cent in the last one week from $3,525 last Friday to $3320 Wednesday on continued profit-booking by Chinese traders.

Inventory during the period under consideration, however, slipped marginally to 72,425 tonnes from 73,250 tonnes. The falling zinc prices can partly be attributed to the 53,000-tonne surplus stocks estimated by the International Lead and Zinc Study Group (ILZSG).

Global refined zinc use rose to 3.720 million tonnes in the first four months of 2007 from 3.563 million a year earlier. Refined zinc output rose to 3.773 million tonnes from 3.424 million tonnes the previous year. During April, producer stocks fell to 328,000 tonnes from 343,000 tonnes in March and from 332,000 tonnes at the end of last year.

The ILZSG estimates that global zinc usage was 3.720 million tonnes in January-April, up from 3.563 million tonnes in the same period last year. Europe saw usage grow by 8 per cent y-o-y and China by 8.4 per cent y-o-y, but demand in the US is estimated to have fallen by 7.1 per cent.

In the spot physical Mumbai market, zinc slab slipped by Rs 4 in the last one week to close at Rs 187 per kg. Meanwhile, the Indian lead behemoth raised lead selling prices by 5.5 per cent with immediate effect to quote the metal at Chanderia smelter at Rs 1,19,000 a tonne on rising international prices.

In London, lead price sank marginally during the said period to settle on Wednesday at $2,519 from $2,530 on last Friday. Lead has climbed to all-time highs on speculation that supply disruptions and cuts to Chinese supply would exacerbate a shortage of the metal.

China, the world's largest producer, raised export taxes on products, including lead and zinc, on June 1 to help curb a record trade surplus.

Exports from Ivernia Inc's Magellan mine in Australia, which accounts for 3 per cent of the global supply, have been suspended since March because of an investigation into lead poisoning at the port of Esperance. Demand for lead, used in car batteries, exceeded supply by 111,000 tonnes in the first four months of 2007.