LME Zinc Exceeds Lead after 9 Months

Zinc price exceeded lead price at London Metal Exchange for the first time in late 9 months. LME zinc settlement jumped up by US$ 130.5 or 6% to US$ 2,289.5 per tonne on 13 May from the previous day while lead settlement increased by US$ 51 or 2% to US$ 2,283 per tonne.LME zinc settlement hit the historical record at US$ 4,619.5 on 24 November, 2006 while declined to the recent bottom at US$ 2,180 on 22 January, 2008. The background is that zinc metal is expected to become oversupply by about 200,000 tonnes worldwide in 2008 according to the supply and demand forecast by International Lead Zinc Study Group.However, large natural disasters recently emerged in China where 30% of global zinc production is concentrated. Global zinc supply might become short against the demand despite of the previous forecast.Zinc ingot production seemed to decrease by about 100,000 tonnes in the country, damaged by heavy snow in late January. Japanese zinc producer source said the global zinc supply seemed to balance with the demand with this output reduction. In addition, a huge earthquake emerged this week. It is said that Chinese zinc smelters are pausing and the output reduction might total to 400,000-500,000 tonnes per annum.