LONDON: Zinc prices on Wednesday pushed towards the 16-month highs hit earlier this month as resurgent Chinese industry bolstered the outlook for demand and the yuan strengthened, making metals more affordable for Chinese buyers.
Benchmark zinc on the London Metal Exchange (LME) was up 1.2% at $2,526 a tonne at 1600 GMT, its fourth consecutive daily gain. It reached a high of $2,583 on Sept. 1.
Prices of the metal used to galvanise steel are up 34% from their low in March as manufacturing, steel production and infrastructure building accelerate in China, the largest consumer.
"Demand has picked up in China and we've seen some drawdown in zinc stocks," said Robin Bhar, an independent analyst, predicting prices near current levels at year-end.
China's currency reached its strongest against the dollar in more than a year after rising 6% in four months.
The OECD upgraded its forecast for the global economy this year to a 4.5% contraction from a 6% contraction.
The World Trade Organization said the United States had breached global trading rules by imposing tariffs on China, drawing anger from Washington.
Zinc inventories in LME-registered warehouses have risen to 219,625 tonnes from 50,000 tonnes in January, but stocks in Shanghai Futures Exchange sheds have slipped to 58,453 tonnes from 170,000 tonnes in March.
The discount of cash zinc to the three-month contract on the LME shrank to $21.40 a tonne from $31 earlier this month, suggesting tighter nearby supply. The roughly 13 million tonne a year zinc market saw a 205,000 tonne surplus in the first six months of 2020, the International Lead and Zinc Study Group said last month.
China's output of copper, lead and zinc rose strongly in August. Kazakh production of copper increased while its zinc output fell.
The Trump administration said it will remove its 10% US tariffs on raw Canadian aluminium.
LME copper was up 0.2% at $6,776.50 a tonne, aluminium was 0.1% higher at $1,791, nickel gained 0.2% to $15,230, lead fell 0.7% to $1,895 and tin was up 0.2% at $18,250.
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