China-driven rally sends zinc to near decade high, lead soars

Zinc soared to a nine-year high on Monday and lead hit a five-year peak as reports of more infrastructure investment in China and signs of strong property investment in the world's top metals user sparked heavy buying. Zinc, used to galvanise steel, was the biggest winner as Chinese steel futures jumped to 31-month highs, driven also by a rotation of funds into risky assets, supported by optimism over global growth into 2017.
China on Monday approved a 247 billion yuan ($36 billion) railway plan to improve transport links in the country. China's real estate investment growth meanwhile quickened in October to its highest since April 2014. "We're in the midst of Chinese credit boom at the moment, social financing has been growing strongly in the last few months ...(but) I think we're starting to run into overbought territory," said Oxford Economics commodities analyst Dan Smith.
London Metal Exchange zinc surged more than 5 percent to $2,985 a tonne, its highest since October 2007. It ended up 2.9 percent at $2,900. Lead jumped more than 7 percent to $2,576.50, its highest in more than five years. It ended up 5.5 percent at $2,523. In Shanghai, zinc and lead surged as much as 7 percent while steel rebar rose to its loftiest since May 2014.
In a bid to tame speculation and surging prices, the Shanghai Futures Exchange will limit the size of positions taken by non-members in some steel rebar futures. Sentiment in base and ferrous metals remained bullish, however. Zinc has surged nearly 80 percent this year on fears that closures and suspensions of major mines will lead to shortages. Lead is often mined in the same deposits as zinc. Copper rose nearly 3 percent to a high of $6,045.50, its highest in just over a year. It was last bid up 0.02 percent at $5,880.
December's holiday slowdown period could soon put a cap on copper, which is heading for its biggest monthly gain in more than a decade in November, said Bonnie Liu, general manager of GF Futures. Aluminium ended down 0.6 percent at $1,747, tin closed up 0.6 percent at $21,050 while nickel ended up 0.6 percent at $11,635.