Which Metals will be in the Most Demand Over Next 8 Quarters? Ignace Proot, the Senior Analyst Covering U.S. Metals & Mining for Sanford C. Bernstein & Co., LLC

Wall Street Transcript

67 WALL STREET, New York - April 15, 2014 - The Wall Street Transcript has just published its Metals & Mining Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Mining Safety and Environmental Concerns - Global Iron Ore Production - Emerging Market Infrastructure Construction - Chinese Demand for Industrial Metals - Zinc Supply Deficit - Demand Growth in Zinc - Accelerated Grid Spending in China - Copper Demand in China

Companies include: Cliffs Natural Resources Inc. (CLF), Teck Resources Limited (TCK), Freeport-McMoRan Copper & Gold (FCX), Arcelor Mittal (MT), Nucor Corporation (NUE), United States Steel Corp. (X), Horsehead Holding Corp. (ZINC), Steel Dynamics Inc. (STLD), POSCO (PKX) and many others.

In the following excerpt from the Metals & Mining Report, an expert analyst discusses the outlook for the sector for investors:

...In terms of the most bullish commodity, it is zinc. Zinc is the commodity on which I see around 3% fundamental demand growth rate in the next five years. And the challenge with the zinc commodity is that it's really a commodity which has a very difficult supply in the sense that if you look at, for example, iron ore, the big three iron ore miners are almost making up 60% of globally traded iron ore. If you look at zinc, the top three zinc names are making around 20% or even a little bit less of globally traded zinc. So you already have a much less consolidated supply.

We've also seen that the last couple of years the zinc price has been fairly depressed. We estimate that the price has on average been 25% to 30% above the C-1 cost in the cost curve of the 90% producer, which has been too low to really incentify significant new developments of zinc.

The third point is that zinc is typically around 85% of zinc is mined with other commodities, being copper, lead, gold and silver, and as a consequence the approval, or let's say the decision to go ahead with a zinc project, is much more linked to how you look at the prices of all these commodities, which make it a much more difficult exercise to really validate.

Zinc mine depletion is also a factor. And so as a consequence of that, I think there is going to be a shortage. I see a shortage coming up in the...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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