Zinc, lead rise to records in London after inventories decline

Zinc and lead rose to records in London after inventories of both metals dwindled, reducing supplies.

LME-tracked inventory of zinc, used to galvanize steel, dropped 1.8 percent to 99,550 tons, the exchange said today in a daily report. Stockpiles have plunged 79 percent in the past year to the lowest level since April 1991.

"At current rates of decline, LME zinc inventories could be depleted by midway through next year," John Meyer, a London- based analyst at Numis Securities said via telephone.

Zinc for delivery in three months on the London Metal Exchange rose as much as $70.15, or 1.6 percent, to $4,500.15 a metric ton. It traded at $4,491 as of 10:58 a.m. local time. The contract has more than doubled in the past twelve months.

Consumers are tapping the stockpiles to fill a supply deficit forecast at 448,000 tons this year and 18,000 tons next year, according to Brook Hunt forecasts cited by Meyer.

Record zinc prices have boosted stocks of zinc miners. Shares of Korea Zinc Co. and Zinifex Ltd., the world's largest producers, advanced to records today. Other zinc-related stocks, including trading company Hunan Zhuye Torch Metals Co., also gained.

"Zinc prices are expected to stay at high levels next year because supplies aren't something that can be easily increased," said Kim Hyung Chan, who helps manage about $500 million at KTB Asset Management Co. in Seoul. "Prices may not rise rapidly like this year in 2007, but it will definitely not fall back to previous levels. This is positive for zinc stocks."

Lead gained $6, or 0.4 percent, to $1,716 a ton. Stockpiles tracked by the LME dropped 1.9 percent to 47,050 tons. They have dropped 3.2 percent in the past 12 months.

Among other LME-traded metals, copper gained $30, or 0.4 percent, to $7,390 a ton, aluminium added $7.25 to $2,805.25 and nickel was up 1.3 percent at $31,500 a ton. Tin rose $100 to $10,200 a ton.