Base Metals

Zinc is used to galvanize steel, in the production of brass and zinc base alloys as well as for other construction, transportation, engineering and consumer goods purposes. While the demand in clearly present for this commodity, the current oversupply is causing the market value to plummet. Over 100,000 tonnes of surplus have been predicted for […]

Zinc is used to galvanize steelZinc is used to galvanize steel, in the production of brass and zinc base alloys as well as for other construction, transportation, engineering and consumer goods purposes. While the demand in clearly present for this commodity, the current oversupply is causing the market value to plummet. Over 100,000 tonnes of surplus have been predicted for this year alone.

Greg Waller, vice president in investor relations for Teck Cominco says while there is an oversupply, it isn’t as much as some people think.

Regardless, it’s a good time to buy low. A continued weakness has been predicted over the next year or two. This situation is likely to cause a turn around for zinc. Resulting cutbacks, mergers and acquisitions as well as the closing of mines that are producing below the price of zinc will lessen the supply and drive the price up. The situation will correct itself by 2010, Waller said, when some significant closures happen.

Canadian companies such as Teck Cominco (TSX: TCK.A and TCK.B) and Hudbay Minerals Inc. (TSX: HBM) are solid names in the industry to consider. Both are involved in other commodities such as copper and gold which have been on the upswing for some time.

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