With the Christmas and New Year holidays having occurred since we last wrote, there have been no new developments in the negotiations over this year's annual contract terms. Teck Cominco and Noranda will be visiting their European customers this week, and we understand that Teck Cominco will then be off to Asia to meet with the Japanese and Korea Zinc. Talks are also being held between some European smelters and European miners. Some informal talks took place between European miners and smelters before Christmas, but little progress was made. As discussed in previous monitors, the European smelters will be looking for an increase in the TC from the 2003 level, arguing that the market has eased with the closure of the ISF smelters. However the miners will be looking for a further decrease in terms, arguing that the market is still fundamentally very tight. There is considerable potential for concentrate demand to increase as a number of smelters have been forced to reduce production due to concentrates shortages, particularly in China and other countries in the FEB. In the Far East, the market is tighter than in Europe, due to continued strong Chinese demand and the closure of the Lennard Shelf operation, a key supplier to China and Korea Zinc. High freight rates have also discouraged traders from shipping concentrates from Peru to Asia. We have heard that the miners will be opening talks in Asia with a TC 10- 15 dollars/t lower than the 2003 level.
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