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uk comments.growth company investor, page-14

  1. 13,575 Posts.
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    re: jp morgan goes over weight.zinc.lead or.... Depends a little on what the metals all do Bj.

    Seems as though zinc and lead have separated themselves from Cu atm.Just whether or not they move as a complex again anytime in the future is a big question.Seeing the REAL amount of zinc is now a fair way below that of copper we COULD see a similar situation as we have with nickel Vs the other metals if zinc stocks drop below 50,000ts

    The big clue is to watch the cancelled warrants against the LME stock.If it bounces off 10-20,000t again(as it did a month or so back) and rises up towards the zinc on warrant then look out $5,000/t.If cancelled warrants drops below 10,000t then we could be seeing some controlled selling of refined zinc into the LME stocks.It all has a lot to do with just when the supply side starts to respond to this apparent constant strong demand.

    Chinese have said they will sell quality refined zinc into the high spot price market.Just what effect these new Chinese export taxes have on this intention will depend on just how high the zinc price goes.I suppose logically it will have to go another 10% if China is to be able to sell at a profit to this market.I think that was the figure they were talking.Not absolutely sure that it applies to zinc though.If it does though the mid 4000's is probably where the price will get to before they start selling in any meaningful way.

    Indicators are still to the high side with the zinc price though with Chinese growth to continue around 10%.They have made no secret they want to shift their population base more towards the cities,no doubt to create economic centres that are more self sustainable rather than the decentralised system that is so hard to maintain on an economies of scale basis.This will still take massive investment in infrastructure which has obvious conotations for base metals in the medium and even long term past 2010.

    But I definitely take your point that JPM has a pretty stuffed track record as of late and they are going very defensive in their recommendations.As a matter of fact they arnt the only ones with the likes of Barclays etc also forecasting lower prices a while back and they trade on the LME.I dont think they have calculated the effect the funds and Chinese/Euro growth would have in the face of a declining US property market.

    Still brings up the question as to what will happen to the base metals if the US drags itself out of this recessive bout.This could be what the analysts arnt saying atm as its a bit of a frightening scenario having China/Europe/India and the US all in a growth phase.

    But we'll see.

    d.
 
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