Local zinc makers buck global trend

Despite zinc prices softening on the London Metal Exchange (LME), domestic players are in no mood to follow suit.

One of the market leaders, Hindustan Zinc Limited (HZL), raised its basic products selling prices by Rs 2,200 (1.2 per cent) from September 30.

Local traders attributed the current upward price revision mainly to an anticipated price rise in the international market and an expected demand boost by the consumer industry in the domestic market ahead of the construction season.

Construction activities in the country gather steam after Diwali. But, demand for raw materials starts from October.

With the current price revision, high grade zinc has reached Rs 1,80,700 per tonne compared with Rs 1,78,500 per tonne in the last revision, effective from September 23. In September, the company had cut the prices by Rs 400 across sections to move in tandem with the prices on the LME.

Zinc prices on the LME softened $70.5 to $3,360 between September 22 and September 29, but recovered on Monday to $3,420 in the early trade following stock building by traders.

Inventories, meanwhile, on the LME registered warehouses slumped to 139,125 tonne on Monday from 144,075 tonne on September 22.

In fact, Mitsui Mining & Smelting Co of Japan lowered its zinc selling price by Y5,000 to Y4,40,000 a tonne. The estimated average zinc selling price for September is totaled at Y4,44,500.

Fundamentals for zinc remain strong as China, the world's biggest consumer of zinc, is expected to see its demand top 4.4 million tonne in 2010, averaging a yearly growth of around 7.4 per cent, according to sources in China.

China's zinc production rose 14 per cent on year in January- August to 1.97 million tonne. The further price rise looks imminent as all roads lead to a deficit zinc market in the whole of 2006.