Zinc majors jack up prices

Market expects possible hike in aluminium and steel rates as well.

Hindustan Zinc (HZL), the country's largest zinc producer, for an unprecedented tenth time in calendar 2006, has increased prices.

The metal is now quoted at Rs 1,27,300 a tonne, following the latest hike of Rs 4,000 for high-grade primary zinc. HZL had last increased prices on March 16, by Rs 1600 a tonne.

The other domestic producer, Binani Zinc, also increased prices of high grade primary zinc today by Rs 5,000 a tonne to Rs 1,42,000 a tonne. Other zinc products have also witnessed a similar increase in their prices.

The increase is attributed to the surge in spot zinc prices on the London Metal Exchange (LME). On Monday, the spot zinc prices on the LME were up at $2,460 level. Prices have increased by almost 20 per cent within a month.

"This is unprecedented. The norm is to review prices fortnightly, but now almost every week there is a new announcement," said an industry analyst.

Industry experts point at the tight money supply scenario and depleting inventories as an explanation to the consistent increase in zinc prices.

"Moreover, while the demand is good, production has softened with a shortage in concentrates (raw material). As of now there is no problem in the availability of zinc, but there is a threat of it getting squeezed," said an official from Binani Zinc.

Interestingly in 2000-01, the industry was facing a global recession. International prices had hit a rock-bottom $730 a tonne. "Now we are witnessing prices at unforseen levels," added the official.

The market is also abuzz on possible increase in prices of aluminium and steel. "This could happen by the end of the month," said a trader. Industry players expect the momentum to continue.

"There is no reason to believe that prices have reached their peak. Prices will further go up," said the Binani official.