Zinc prices continued their upward trajectory on Wednesday, reaching their highest level in over four years as a combination of speculative interest and supply concerns supported the market. The benchmark three-month zinc contract on the London Metal Exchange rose 0.4% to $3,907 per metric tonne by 0945 GMT, marking its highest price since June 2022, according to reporting from Reuters. The metal, which is primarily used for galvanising steel, has experienced significant regional disparity in supply and demand dynamics.
While stocks are being depleted at warehouses registered with the LME, inventories are accumulating in China, creating a geographic imbalance that is supporting price strength. The tightness in available supply has driven the cash LME zinc premium over three-month futures contracts to $132 per ton, up substantially from zero in early July and representing the highest premium since December of last year. However, some market participants expressed caution about the sustainability of zinc's rally.
Broker Sucden Financial stated in a note that the upward movement in zinc prices remains vulnerable to a position unwind when market momentum falters. The three-month LME copper contract, which is also benefiting from declining inventories and supply concerns, remained virtually unchanged at $14,355 per ton. Copper had previously reached its highest level in six months at $14,437 per ton.
The Shanghai Futures Exchange's most traded copper contract rose 0.6% to 108,750 yuan, equivalent to approximately $16,182.55 per ton. As markets awaited the release of U.S. inflation data due at 1230 GMT, copper was kept in check despite supply concerns. Non-traditional market participants, including hedge funds and speculative traders, continued to trade on data showing falling warehouse stock levels.
David Wilson, head of metals strategy at BNP Paribas, noted that many non-traditional sources trade copper and substantial amounts of capital move quickly based on data releases. Other base metals showed mixed performance. Aluminium declined 0.1% to $3,236 per ton, nickel dropped 0.3% to $15,990, and tin fell 0.2% to $55,750.
Source: Reuters
Source: energynews.oedigital.com