Currency woes hit metal marts

Currency woes hit metal marts

PERTH (Reuters): Demand for metals in Southeast Asia has
fallen off dramatically due to the region's currency crisis,
industry executives and traders said yesterday.

Orders for zinc and nickel, widely used in steelmaking, are
showing signs of softening as countries such as Taiwan, Indonesia
and Malaysia re-think their ability to finance big infrastructure
projects.

Uncertainty over future demand for zinc in the region, which
is closely tied with automotive and structural steel galvanizing
activities is placing further downward pressure on a market
already reeling from recent price collapses, traders said.

Much of the metal produced in Australia traditionally is
exported to Japan and South Korea, although Southeast Asian
markets have taken increasingly bigger shares in recent years as
their economies boomed.

"The currency crisis has really thrown a lot of companies that
grew to depend on Southeast Asia into a loop," said one trader.

Pasminco Ltd., the world'a biggest zinc company, has seen its
share price slip as concerns mount that forecasts for zinc
consumption may be overblown.

Australia's largest nickel miner, WMC Ltd., this week sacked
nearly 10 percent of its workers in its Western Australia
division due to poor market conditions.

Traders said they expected a backlog of metals to build at the
producer, consumer and trading levels as Southeast Asian demand
continues to wane.

Some copper is being diverted to other parts of the world,
including Europe, which is pushing down terminal and physical
market prices.

Requirements for aluminum and copper sold in spot markets have
been particularly hard hit, as depreciated currencies coupled
with reduced industrial activity begin to discourage buyers from
rebuilding stocks, they said.

Greg Turnidge, managing director of Aluminum Smelters of
Victoria Pty. Ltd. (Aluvic), said that long-term contract sales
of aluminum to key markets were intact but that spot sales were
down.

Spot aluminum premiums have fallen in step with demand by as
much as US$10 or $20 a ton to around $65 a ton in Japan, Turndige
said.