Zinc prices reached their strongest level in nearly a month on Wednesday, driven by concerns over mine supply and shortages outside China, according to Reuters. Benchmark three-month zinc on the London Metal Exchange (LME) was flat at US$3,842 ($5,454.83) a tonne at 15:15 GMT, after touching US$3,874.50, its highest level since 30 September. Declining mine output has pushed smelter treatment charges to record lows and prompted cutbacks in refined metal production, Reuters reported.
Analyst Viktoria Kuszak of broker Sucden Financial told a webinar: “Unless concentrate availability improves, Chinese refined output is unlikely to respond quickly enough to relieve tightness in international markets.” Chinese exports of the metal this year, which are mainly used for galvanising steel, have eased shortages elsewhere. Kuszak said it was unclear whether such exports would continue to ease the market. Near-term tightness was visible in the spread between LME cash zinc and the three-month contract.
The cash premium has spiked to US$106 a tonne from US$45 a week earlier, according to Reuters. Although overall zinc inventories have recovered, owners have increasingly filed notices to withdraw their metal from LME warehouses. Available LME zinc stocks have fallen 14% since last week, Reuters reported.
Trade houses are also playing a significant role in the market, which could add to volatility. Robert Montefusco, also speaking at the Sucden webinar, said: “It’s a bit of a game right now, and the trade houses are controlling it. We’ll have to wait to see if these stocks are going to be used or just moved to another warehouse.” Reuters noted that record long and short positions held by investment managers and funds have also contributed to the sharp price moves.
Among other LME base metals, copper slipped 0.2% to US$14,449.50 a tonne, lead fell 0.9% to US$1,915, and tin dropped 1.7% to US$50,610. Nickel was little changed at US$15,630. LME aluminium had climbed to its highest level in four weeks before reversing gains following a Reuters report on Chinese producers’ ambitious overseas growth plans, and was last down 0.8% at US$3,062 a tonne.
Source: Reuters, published via Mining.com.au (https://mining.com.au/zinc-price-hits-highest-in-nearly-a-month-on-supply-fears).
Source: mining.com.au