Zinc prices on the London Metal Exchange (LME) rose to a two-week high on Monday as falling inventories and rising power prices boosted sentiment toward the metal used to galvanise steel, according to Reuters, reported by Business Recorder. Benchmark three-month zinc was up 1.5% at $3,800.50 a metric ton as of 1030 GMT, after earlier touching $3,821.50, the highest level since October 12, Reuters reported. Citi described zinc sentiment as "neutral to modestly bullish" in a post-LME Week note published on Monday.
The bank said that while mine supply is likely to grow in 2027, some market participants think the market remains too optimistic about the scale of that growth, given the under-performance of recent years. Data from the International Lead and Zinc Study Group showed the global refined zinc market swung to a deficit of 3,900 tons in August, from a surplus of 27,500 tons in July. One trader said zinc prices were being supported by high power prices, declining production in Peru and a drawdown in inventories.
Stocks are tightening across the main exchanges. Zinc stocks on the Shanghai Futures Exchange fell 5% from the previous week to 137,139 tons, their lowest level since March, according to exchange data released on Friday. Available, or on-warrant, LME zinc inventories stood at 133,700 tons.
The cash LME zinc contract traded at a premium of roughly $80 a ton over the three-month forward, pointing to near-term tightness. Exchange data showed that one entity holds between 30% and 40% of LME zinc warrants and cash contracts. In the broader base metals complex, copper edged up 0.1% to $14,328.50 per ton, with little impact from a strike at Teck Resources' Highland Valley copper mine.
Panmure Liberum analyst Tom Price said Highland Valley is one of Teck's key assets but, as a mine, "it's not that big", estimating its annual production at 100,000 tons. The Yangshan copper premium, a gauge of China's appetite for imported copper, hit $168 a ton on Friday, its highest since 2014, after ShFE copper stocks fell more than 25% to 54,356 tons. Elsewhere, aluminium dipped 0.1% to $3,039.50, lead added 0.6% to $1,918.50, nickel fell 0.5% to $15,765 and tin gained 1.1% to $50,920.
Sources: Reuters (via Business Recorder); London Metal Exchange; International Lead and Zinc Study Group; Citi; Shanghai Futures Exchange; Panmure Liberum.
Source: brecorder.com