With optimism about the US economy growing there is sometimes a tendency for the base metals markets to move in tandem rather than reflecting the individual Fundamentals. Price movements in the last week reasonably coincide with the current view of the fundamentals. Aluminium and tin prices fell, zinc was unchanged while the rest of the sector rose. The zinc price would have fallen had it not been for an announcement of a 55,000 ton production cut at Teck Cominco. The improvement in the price of some of the metals, particularly copper, has come about despite noticeable rises in LME inventories. Copper's rally is likely to begin stalling on the back of the rising supply and weak demand picture. The focus of the zinc market will now shift to the American Zinc Association meeting in Scottsdale Arizona. Traditionally the annual TC negotiations begin in earnest here, and are sometimes settled at the meeting. With spot TCs firmly in the miners' favour, it could be sometime before smelters agree to settle at a TC, which is likely to be below 170 dollars/ton. Further cuts in smelter production now appear likely.
NSTL
