Zinc nears $4,000 and on track for biggest monthly jump since January

Zinc struck a four-year high near the $4,000 mark on Friday and was on course for its biggest monthly climb since January as available stocks on the London Metal Exchange shrank, renewing investor concerns over market tightness.

Benchmark three-month zinc on the London Metal Exchange was up 1.6% at $3,947 a metric ton as of 0900 GMT, after earlier touching $3,955, its highest since May 2022. Zinc, used to galvanise steel, was poised for an 8.2% gain in August, which would mark its strongest month since the start of the year. It is up 3.2% this week and heading for a sixth straight weekly jump.

The LME is closed on Monday for the August bank holiday in Britain.

LME stocks data showed 19,125 tons of fresh zinc warrant cancellations on Thursday, or orders to remove metal from warehouses, mostly in Singapore. That reduced the available zinc in LME warehouses to 75,600 tons, equivalent to around two days of global consumption.

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“Zinc’s outperformance reflects increasingly visible physical tightness,” Neil Welsh, head of metals at Britannia Global Markets, wrote in a note. “LME inventories have been drawn sharply lower, mine and smelter disruptions have restricted refined availability.”

The immediate tightness was shown in time spreads, where the premium of the cash LME zinc contract over the three-month forward was around $245 a ton.

In China, however, Shanghai Futures Exchange zinc closed up only 0.1% on Friday, with stocks edging down from the previous week but still relatively high at 153,669 tons. Chinese zinc exports have in part eased fears of a shortage outside the country.

Meanwhile, LME copper, where low inventories and warrant cancellations have also supported prices, gained 0.6% to $14,363 a ton. The metal was set for a ninth straight weekly gain and a monthly rise of around 4%.

SHFE copper stocks plunged by 19.1% to 72,428 tons this week.

Aluminium was flat at $3,234.50, lead dipped 0.1% to $1,913, nickel nudged up 0.3% to $16,925 and tin edged up 0.1% to $55,425.