Zinc hits highest in nearly a month on supply fears
XLB•Zinc rose 0.7% to $3,868 a metric ton, its highest since September 30, as concerns about mine supply and shortages outside China supported prices. The premium for LME cash zinc over the three-month contract rose to $106 a ton from $45 last week.
1. Supply concerns lift zinc
Zinc prices climbed for a fourth session on Wednesday, reaching their strongest level in nearly a month. Declining mine output has driven treatment charges for smelters to record lows and prompted cuts to refined metal output.
2. Tightness outside China
Chinese refined output is unlikely to respond quickly enough to ease international market tightness unless concentrate availability improves, Sucden Financial analyst Viktoria Kuszak said. Chinese exports had helped relieve shortages elsewhere this year, but Kuszak said it was unclear whether that would happen again.
3. Available stocks fall
Although overall zinc inventories have recovered, the amount of available LME stocks fell 14% since last week as owners increasingly sought to withdraw metal. Robert Montefusco said trade houses were involved in the market and could add to volatility.
