Zinc price soars after New Orleans supply freeze
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Zinc price soars after New Orleans supply freeze
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Zinc prices hit an eight-year high yesterday after the London Metal Exchange suspended deliveries from its huge zinc stockpile in New Orleans.
It is still unclear what has happened to the 250,000 tonnes of zinc in the New Orleans warehouse in the wake of Hurricane Katrina. The depot held almost half of all the stocks of zinc traded on the LME. Zinc is mainly used in car production, as an anti-rusting agent.
The LME said in a press release that "the shortage of reliable information about conditions has led to unacceptable levels of uncertainty" about how much zinc is flood-damaged. Simon Heale, the chief executive, said there was starting to be "uncertainty about insurance". He added that the market had reacted smoothly to the suspension.
After the suspension, the three-month zinc forward contract jumped to $1,454 a tonne, its highest since September 1997. It later eased to $1,438. Only last week, the LME said the metal in New Orleans was still able to be delivered.
Some analysts said the stocks in New Orleans were undesirable because of their location even before the hurricane struck. Analysts at Barclays Capital said that zinc prices had been low previously because of the large amount of zinc in warehouses.
They added that since the metal in New Orleans is "unlikely to be lost" and because the US is well-supplied, the price of zinc will fall back from yesterday's spike, but then rise gradually throughout the next 12 months.
Meanwhile, manufacturing output grew for a fourth month in July, due to better production figures from food and transport equipment.
The Office for National Statistics said production had grown by 0.1pc, after gaining 0.2pc in June. Economists said the industry was grinding its way out of recession, and that the worst is past.
Other surveys have suggested that manufacturing is still struggling, especially with higher raw material costs.
http://money.telegraph.co.uk/money/main ... zinc07.xml
It is still unclear what has happened to the 250,000 tonnes of zinc in the New Orleans warehouse in the wake of Hurricane Katrina. The depot held almost half of all the stocks of zinc traded on the LME. Zinc is mainly used in car production, as an anti-rusting agent.
The LME said in a press release that "the shortage of reliable information about conditions has led to unacceptable levels of uncertainty" about how much zinc is flood-damaged. Simon Heale, the chief executive, said there was starting to be "uncertainty about insurance". He added that the market had reacted smoothly to the suspension.
After the suspension, the three-month zinc forward contract jumped to $1,454 a tonne, its highest since September 1997. It later eased to $1,438. Only last week, the LME said the metal in New Orleans was still able to be delivered.
Some analysts said the stocks in New Orleans were undesirable because of their location even before the hurricane struck. Analysts at Barclays Capital said that zinc prices had been low previously because of the large amount of zinc in warehouses.
They added that since the metal in New Orleans is "unlikely to be lost" and because the US is well-supplied, the price of zinc will fall back from yesterday's spike, but then rise gradually throughout the next 12 months.
Meanwhile, manufacturing output grew for a fourth month in July, due to better production figures from food and transport equipment.
The Office for National Statistics said production had grown by 0.1pc, after gaining 0.2pc in June. Economists said the industry was grinding its way out of recession, and that the worst is past.
Other surveys have suggested that manufacturing is still struggling, especially with higher raw material costs.
http://money.telegraph.co.uk/money/main ... zinc07.xml
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Zinc price soars after New Orleans supply freeze
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http://www.lme.co.uk/zinc_brands.asp
http://www.lme.co.uk/zinc_brands.asp