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zinc prices on the up???? (article)

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    Katrina pushes zinc to an eight-year high
    Kevin Andrusiak
    September 07, 2005
    THE price of zinc, an essential steel-making commodity, has risen to an eight-year high after the London Metal Exchange stopped trading stockpiles held in New Orleans.

    The hurricane-ravaged city is home to about a quarter of the world's supply of the base metal, which is used to protect steel from corrosion.

    The fate of the stockpiles following the hurricane is unknown.

    Zinc was last night trading at $US1454 a tonne, the highest level since September 1997.

    About 250,000 tonnes of zinc, just under half of the LME's total stocks, was sitting in New Orleans warehouses when hurricane Katrina struck.

    Zinc is stockpiled in New Orleans because of good warehouse deals and the geographic location of the city. Some analysts have suggested the zinc could not have disappeared because it was too heavy to be washed away, but it would not be available for a number of weeks and may need to be cleaned.

    The warehouses also hold 900 tonnes of copper and 1200 tons of aluminium.

    An LME spokesman said the organisation was no closer to finding out what had happened to the zinc.

    "It's an unusual set of circumstances," he said.

    He said the exchange was talking to companies that owned the warehouses to establish the condition of the stocks.

    Brokers have been quick to react to the news.

    UBS said zinc would be the hottest commodity on the market for a while.

    "Zinc should continue to outperform in a market where other base metals are forecast to decline," the company said. Goldman Sachs JB Were said zinc was its favourite over the short and medium term.

    The outlook started with coverage of junior producer Kagara Zinc with an outperform and longer-term buy recommendation.

    Kagara Zinc closed 6c higher yesterday at $1.39.

    Fellow zinc miner Zinifex was also 6c higher at $3.93.
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