Zinc snaps six-day rally as stocks edge up

Zinc prices fell on Thursday as rising inventories eased concerns about supply tightness outside China, breaking a six-session rally during which speculative buying drove the metal to its highest level in four years.

Benchmark three-month zinc CMZN3 on the London Metal Exchange was down 0.5% at $3,874.50 a metric ton by 1402 GMT, having hit $3,949.5, its highest since June 2022, on Wednesday.

Daily LME data showed zinc stocks had risen to a three-week high of 97,875 tons after 1,100 tons of inflows to LME-registered warehouses in Singapore and Hong Kong.

However, the premium of the LME cash zinc contract over the benchmark CMZN0-3 widened to $215 per ton, the highest level since December, indicating persistent tightness in nearby supply.

"LME zinc stocks have risen slightly recently but at just under 100,000 tons they remain historically low," said Jonathan Leng, Wood Mackenzie's head of research for zinc markets.

"We may see a rise in exports from China soon, which could combine with profit-taking to bring the LME price down, but otherwise, there is little in the way of new supply to bolster LME stocks in the next few months."

Wood Mackenzie raised its estimate of this year's global zinc market deficit to almost 200,000 tons from 80,000 tons it forecast in June as it downgraded its smelter production forecasts by 110,000 tons. The reduction was mainly in China, where low treatment charges are affecting smelter profitability.

In other LME metals, copper CMCU3 rose 0.1% to $14,262.50 a ton in cautious trade as the market awaited Federal Reserve Chair Kevin Warsh's speech on Friday for further clues on the path of U.S. interest rates.

The metal closed at a record high of $14,349.5 on Tuesday and touched the highest since January of $14,437 on Wednesday amid worries about tight inventories outside the U.S.