Metals-Zinc prices rise on tighter supply
XLB•Zinc rises for a seventh session
Zinc prices rose for a seventh consecutive session on Thursday, boosted by thin availability outside China and exchange positioning.
Benchmark three-month zinc CMZN3 on the London Metal Exchange was up 0.92% at $3,929 a metric ton by 0300 GMT. The most-traded zinc contract on the Shanghai Futures Exchange SZNcv1 was up 1.69% at 26,700 yuan ($3,972.68) a ton.
Supply tightness and record levels on the LME
The metal, mainly used to galvanise steel, touched its highest level on the LME in more than four years on Wednesday. Its impressive rally, boosted by waning stocks outside China, has echoes of last October's squeeze.
The cash-to-three month spread on the LME CMZN0-3 was in a $198.95 backwardation, indicating tight physical availability. Data from the International Lead and Zinc Study Group showed the global refined zinc market swung into a deficit in June.
But total LME stocks MZNSTX-TOTAL at 97,325 tons were still more than twice the lows of the October squeeze, leading some analysts to downplay the influence of the supply shortage, pointing instead to support from a sharp increase in speculative positions on the LME.
"Yes, there is physical tightness outside China, but not as bad as last year and it does not justify current prices," Sandeep Daga, head of research at Metal Intelligence Centre, said.
Other base metals move as U.S. rate expectations stay in focus
Elsewhere, copper, which has also been supported by thinning inventories, limped up 0.37% on the LME CMCU3 and fell 0.21% on the SHFE SCFcv1.
Market participants are gauging Wednesday's U.S. inflation data which showed the decline in war-induced inflation paused, which is likely to intensify the U.S. Federal Reserve's debate about interest rates.
