Rising demand pushes up zinc on LME

Zinc gained in London, rebounding from the largest weekly drop in at least 17 years, on speculation price declines were exaggerated and demand and supply will continue to be closely matched.

The metal used to galvanise steel more than doubled to a record last year amid rising demand from China. Prices on the London Metal Exchange slumped 15 per cent last week as analysts including those at Barclays Capital cut 2007 price forecasts.

"We believe the zinc market will remain relatively tight in the first half and we expect a bounce in pricing, although not to levels we saw last year,'' said Adam Rowley, a London-based analyst with Macquarie Bank.

Zinc for delivery in three months on the London Metal Exchange gained $75, or 2.4 per cent, to $3,155 a metric ton as of 9:46 am local time. It has fallen 25 per cent this year. Zinifex, the world's second-largest producer of the metal, said today prices for zinc aren't likely to match its performance in 2007 as supply catches up with demand.

"Zinc is finding some support above $3,100 after Friday's sell-off,'' said John Kemp, a London-based analyst with Sempra Metals, one of 11 companies trading on the floor of the LME.

"It will remain vulnerable to further pricing pressure as more production comes on line this year.'' Also on the LME, copper rose $50, or 0.9 per cent, to $5,395 a tonne, nickel advanced $575 to $37,975, aluminum increased $17 to $2,737, and tin gained $300 to $12,000. Lead rose $15 to $1,645.