Zinc hits highest in nearly a month on supply fears

LONDON: Zinc prices climbed for a fourth session to hit their strongest level in nearly a month on Wednesday, amid worries about mine supply and shortages outside China.

Benchmark three-month zinc on the London Metal Exchange gained 0.7% to $3,868 a metric ton in official open-outcry trading, its highest since September 30.

Declining mine output has spurred record-low treatment charges for smelters and cutbacks of their refined metal output.

“Unless concentrate availability improves, Chinese refined output is unlikely to respond quickly enough to relieve tightness in international markets,” analyst Viktoria Kuszak at broker Sucden Financial, told a webinar.

While Chinese exports of the metal this year, mainly used for galvanising steel, relieved shortages elsewhere, it was unclear if that would be repeated, she said.

Near-term tightness was evident from the premium of LME cash zinc over the three-month contract, which has spiked to $106 a ton from $45 last week.

While overall zinc inventories have recovered, there have been increasing notices from owners who want to withdraw their metal. The amount of available LME stocks has slipped 14% since last week.

Trade houses were involved in the zinc market, which could add to volatility, Robert Montefusco told the Sucden webinar.

“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,” he said.

LME aluminium climbed to its highest in four weeks before reversing gains after a Reuters report was published about Chinese producers’ ambitious overseas growth plans. It dipped in official activity by 0.1% to $3,083.50 a ton.

Among other metals, LME copper was little changed at $14,479 a ton, lead lost 0.5% to $1,924 and tin shed 0.3% to $51,300, while nickel gained 0.7% to $15,730.