Many Spend Matters readers are probably aware that China has shut down many factories in and around Beijing to clear the air for the Olympics. But it's not just finished products that are being impacted (nor is the impact limited to the Greater China region). According to this article in India’s Economic Times "Security controls on explosives ahead of the Olympic Games in August, combined with tight transport and ongoing crackdowns on small mines and polluting factories, are starting to tighten supply of lead and zinc concentrate in China." Worried about terrorist attacks, the Chinese government has begun to take control and restrict their miners' access to explosive material. The article notes that "lower domestic supply of lead and zinc concentrate could tighten margins for smaller smelters, and ultimately reduce refined metal supply from China, the world's largest producer." What's the upshot? Higher prices on the world market -- even if prices for zinc have begun to come off their highs of 2006 and 2007.
- Jason Busch