The Zinc Thread

London Metal Exchange Says New Orleans Zinc Damaged by Katrina
2005-12-20 05:05 (New York)


By Simon Casey
Dec. 20 (Bloomberg) -- The London Metal Exchange said
70,475 metric tons of zinc inventory stored in New Orleans can't
be traded because of damage caused by Hurricane Katrina.
The metal must be cleaned before it can be delivered
against trading commitments on the LME, the exchange said today
in an e-mailed statement. The LME also said the warehouses
storing the affected metal don't meet its standards because of
storm damage.
Flooding in August submerged 80 percent of New Orleans and
led the LME to suspend trading of metal stored in its registered
warehouses in the city. Warehousing companies must certify that
consignments aren't damaged before the suspension is lifted. LME
staff visited New Orleans last month to inspect inventory.
About 237,300 tons of zinc is stockpiled in New Orleans. Global
inventory is 410,300 tons. Analysts forecast consumers of the metal,
which is mostly used to protect steel from corrosion, will have to
rely on inventory as demand next year beats production.
While the LME's suspension is in place, holders of
stockpiles in New Orleans can borrow inventory from other
locations to deliver against futures contracts. Borrowers won't
pay more than $3.50 a ton each day, the LME said in September.
Zinc for delivery in three months on the LME was down $18,
or 1 percent, at $1,840 a ton as of 9:48 a.m. London time today.

--Editor: Carrigan.