Shanghai zinc down

Shanghai zinc futures continued to spiral lower, falling 5 percent on Monday as investors slashed positions on fears of domestic oversupply and tax changes, while copper steadied following sharp falls in the previous session.
January zinc contract, the most active on the Shanghai Futures Exchange lost 5.5 percent or 1,115 yuan, almost its daily limit, falling to 19,085 yuan ($2,570) a tonne after losing 4 percent on Friday.
"I feel zinc prices in Shanghai have fallen excessively today on panic selling. Traders are worried about domestic oversupply and tax changes for the metal and not willing to hold large positions," analyst Wu Peng at Jinrui Futures said.
China is likely to remove a 5 percent tax rebate on exports of super-high-grade refined zinc from January, while zinc output in the country rose 19 percent in the first nine months of this year.
"The zinc market is concerned about excess capacity in China. Over production in China has weighed on the prices in the past the market is very fragmented and there is not much supply discipline," Mark Pervan, senior commodities analyst at ANZ Bank said. "Trade data is also looking negative. China is only just a net importer and could move into a mild exporting position in the fourth quarter," he added.
Benchmark London Metal Exchange zinc was down $95 at $2,430 a tonne, having fallen below the price of aluminium on Friday for the first time since March 2006. The January copper contract, fell 190 yuan to 58,010 yuan ($7,815) after it also went limit down on Friday and is at its lowest since March.
"Copper could extend its losses in Shanghai, I think the price will possibly fall to 53,000 yuan in a short-term on lack of support from the fundamental and the physical market," said a trader at a leading Chinese copper smelter.
Copper for delivery in three months on the LME was down $65 at $6,075, after touching a three-month low of $6,785 on Friday. Weak US economic data and lurking problems in credit markets continued to haunt base metals which were unable to take advantage of advances in other commodities or a weaker dollar.
Spot gold was up around $7 at $791.25 an ounce. Nymex January crude rose 67 cents to $94.51 a barrel and the euro was around $1.4670, crawling towards an all-time high of $1.4753 hit last week.
"Base metals, oil and gold are all dollar stories, and for gold and oil the dollar is the main factor. Base metals, fundamentals demand in the US and China and the supply situation currently have more influence," Pervan said.