Zinc is bearish, Lead is not: BNP Paribas

NEW YORK (Commodity Online): With economic prospects looking increasingly depressing, Zinc prices may suffer due to the metal's inherent cyclical nature, BNP Paribas said in a report. But Lead prospects look not only better, the bank goes on to predict that Lead will outperform Zinc going into 2013.

"We think it rather unlikely that world economic growth will exceed 3.0-3.5%, but it is not hard to paint a much darker picture of prospects for 2012. Demand for aluminum and zinc, both highly cyclical metals, might be particularly exposed in such an environment, whereas lead demand would hold up relatively well”, the report states.

Both Aluminium and Zinc stocks are relatively high and combined with higher unreported inventories, price outlook does not look promising.

"There is presently no shortage of aluminum and zinc capacity, although that will start to change for zinc in 2013 as some key mines wind down. Zinc will remain in oversupply unless substantial producer cutbacks are made."

The bank forecasts LME Zinc prices to average $2,055/mt for full-year 2012 while LME Lead is expected to average $22