Zinc prices rise 10% this month

Reason for the spike is boom in international markets

Zinc slabs in Mumbai's non-ferrous metals market jumped more than 2 per cent on Saturday and more than 10 per cent in December due to rising international prices mainly in the wake of suspension of 2,819 zinc warrants in New Orleans and closure of third-largest Chinese smelter, Shaoguan, on environmental concerns.

The metal was quoted at Rs 127, a gain of Rs 3 from the previous day's close and Rs 11 from December 1.

On the LME, zinc prices surged more than 8 per cent in December up to 23rd, thereby rising from $1,732 to $1,844 per tonne. At the same time, live stocks slumped from 4,37,800 tonne in December 1, to 4,01,825 tonne on December 23, because of an year-end haul at the producing centres.

About 3,03,225 tonne zinc are on warrant, but a large size is being cancelled due to supply disruptions from China and Peru. Zinc prices at LME slumped marginally on profit-booking, after hitting the fresh 16-year high of $1,897.5 per tonne recently.

Looking at the global concern, Mitsui Mining & Smelting Company of Japan raised its selling price of zinc by (Yen symbol) 7,000, to (Yen symbol) 2,59,000 a metric tonne. This will bring the estimated average zinc selling price for December, to (Yen symbol) 2,59,600.

Primarily used in steel coatings, zinc is in supply deficit in India, as Hindustan Zinc and Binani Zinc - the only two primary producers - failed to meet the demand. These two primary producers have the production capacity of 1,82,000 tonne and 30,000 tonne respectively.

Despite starting commercial production on the expansion plant at Chanderiya in Rajasthan, which has increased the total capacity to 4,00,000 tonne, Hindustan Zinc failed to meet the production target in November, with a total output of only 18,495 tonne as against the target of 32,813 tonne.

Similarly, the company could not meet the production target for this year till November which was set at 2,09,624 tonne, as against the actual production of only 159,767 tonne (139,806 tonne).

Likewise, Binani Zinc managed to produce only 12,062 (15,949) tonne in the April-November period, against the target of 21,560 tonne. During November, the company had targeted to produce 2,651 tonne but managed to produce only 2,158 tonne.

The per capita annual consumption of zinc in India is 200 gram. Domestic zinc prices get affected due to international prices and global developments, a trader said.

Meanwhile, unionized workers at zinc-lead miner Compania Minera Atacocha SAA, have called off their planned strike, after reinstatement of some workers. Atacocha produced 24,972 metric tonne zinc in the third quarter. The company produced 1,05,895 tonne zinc in 2004.

The metal has potential to go up further and may touch Rs 140 per kg in the domestic market, another trader said.