ZINC 1039 
 
scrap metal.~ Brass mills accounted for shipments decreased. The rubber industry,
more than 73% of the zinc consumption. which uses zinc oxide as a chemical
accelThe apparent consumption of zinc oxide erated and vulcanization activator
in rub- 
was about 177,000 tons, down from 186,000 ber processing, continued to be
the largest tons in 1984 Imports were at record high single user of zinc
oxide 
levels whereas domestic production and 
 
 
STOCKS 
 
 Slab zinc stocks held by domestic producers, consumers, and merchants were
less at yearend 1985 than at the start of the year. Weakening prices and
demand in the second' quarter led to declining stock levels, which recovered
some in July and more or less stabilized at that level for the rest of the
year. Stocks of slab zinc held in the market economy countries, according
to the International Lead and Zinc Study Group (ILZSG), fell about 34,000
tons in' 1985, ending the year at 592,000 tons.8 
 Stocks of slab zinc at the London Metal Exchange (LME) ended 1985 at 30,600
tons, up about 1,500 tons from those of 1984. The 
longstanding good ordinary brand (GOB) zinc contract was phased out in September
in preference of the new High Grade (HG) zinc contract. HG zinc accounted
for more than 55% of the ending stocks, up from 16% at the start of the year.

 Inventories of zinc in ores and concentrates at domestic smelters continuously
declined from 66,000 tons in January to 37,000 tons in September, ending
the year at 43,500 tons, according to the American Bureau of Metal Statistics
Inc. Part of the decline and reduced amount at yearend was attributable to
the closing down of Asarco's zinc refinery earlier in the year. 
 
 
PRICES 
 U.S. zinc prices were relatively stable in the first half of 1985 but declined
sharply in the second half. U.S. Mint tenders for SHG zinc metal for coin
manufacture were major influencing factors in' setting zinc-price trends
during the year. Low winning bids in the mid-January Mint tender resulted
in an almost immediate 2-cent drop to 43 cents per pound in the benchmark
U.S. producers' HG zinc price. Higher winning bids in the February tender,
coupled with improving zinc market fundamentals, led to a gradual 4-cent-per-pound
increase in the benchmark zinc price by the end of April. Market conditions
weakened in May, leading to widespread discounting from the producers' price.
Lower-than-expected bids in the mid-June Mint tender accelerated a price
drop to 41 cents per pound for HG zinc by mid-July. Price weakness continued
in the summer months, and in September, surprisingly low Mint tender bids
in the 34to 35-cent-per-pound range for SHG zinc, coupled with continuing
deterioration in world zinc market conditions, led to a severe drop to 35
cents per pound in the US. producers' HG price. Although this price held
to yearend, discounting was widespread. In the first half of 1985, the Metals
Week U.S. HG zinc price averaged 43.8 cents per pound, and in the second
half, 
only 37.0 cents per pound. 
 The 0.5-cent-per-pound premium on the price of PW zinc over the HG, zinc
price largely disappeared in the domestic market in the latter half of the
year. The premium cancellation was attributed to competition mainly from
St. Joe, which dropped the PW premium in August 1984. 
 World zinc prices, which were essentially based on the European producer
price (EPP) and LME price, paralleled U.S. price trends in 1985. The EPP,
as quoted in Metal Bulletin, increased from $900 per ton at the start of
the year to $970 in April before spiraling downward to $670 at the end of
the year. The LME prices closely matched the EPP in the early months of 1985,
but from May, generally were 3 to 4 cents lower. The collapse of world prices
in the latter half of the year was attributed mainly to weakening demand
and perceived surpluses of concentrates and metal. Exacerbating the price
decline was a widely held perception through most of 1985 that China was
reducing its zinc imports below those of 1984; the fact that China purchased
about 
268,000 tons of slab zinc, 38,000 more than in 1984, was not generally known
until late in the year. Despite the price decreases, most Western European
and other world zinc producers continued smelter produc