Zinc rallied on Thursday, supported by sliding stockpiles and signs China may be taking steps to de-escalate its trade dispute with the United States. London Metal Exchange (LME) zinc stocks fell to a decade low of 125,400 tonnes, data showed, while on warrant or available stocks hit their lowest since February.
Shanghai Futures Exchange stocks are also near their lowest in 10 years. "In the short term it's a pretty supportive narrative, but we've seen a very large build in (zinc) concentrate stocks in China and I do think you'll see strong pick up in Chinese refined production next year," said Deutsche Bank analyst Nick Snowdon.
Snowdon said headlines on the China-US trade row were also having an outsized influence on price with no new major Chinese economic data releases expected until the end of the month. China has sent a written response to US demands for trade reforms, three US government sources said, which could lead to talks to end the trade war between the world's top two economies.
Three month LME zinc closed up 3 percent at $2,577 a tonne, having hit its highest in nearly two weeks at $2,605. The global zinc market deficit narrowed to 54,700 tonnes in September from a revised deficit of 81,800 tonnes in August, industry data showed.
China's new home prices accelerated in October, suggesting a key driver of the country's economic growth remained intact despite slower investment and increasing economic headwinds. Metals pundits are eyeing potential economic stimulus measures in China after the country posted slower growth in lending and retail sales last month, pointing to a consumption slowdown even as industrial output and investment picked up.
"In Chinese media, there are more comments from government officials saying what they would do to support the economy. That has also kind of cultivated positive sentiment," said Helen Lau, an analyst at Argonaut Securities. Chinese copper smelter Jiangxi Copper and miner Antofagasta have agreed 2019 copper treatment and refining charges at $80.80 a tonne and 8.08 cents a pound.
Chile's state copper agency Cochilco lowered its average copper price prediction for this year by $0.03 to $2.97 per pound. Bellwether LME copper closed up 1.6 percent at $6,185 a tonne, while aluminium ended down 0.7 percent at $1,929, having hit its lowest since last August. Lead ended down 1.2 percent at $1,929, tin closed up 0.4 percent at $19,390 while nickel ended down 0.5 percent at $11,260.
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