China-driven rally sends zinc to near decade high

LONDON — Zinc soared to a nineyear high on Monday and lead hit a five-year peak as reports of more infrastructure investment in China and signs of strong property investment in the world’s top metals user sparked heavy buying.

Zinc, used to galvanize steel, was the biggest winner as Chinese steel futures jumped to 31-month highs, driven also by a rotation of funds into risky assets, supported by optimism over global growth into 2017.

China on Monday approved a 247-billion yuan ($36 billion) railway plan to improve transport links in the country. China’s real estate investment growth meanwhile quickened in October to its highest since April 2014.

“We’re in the midst of Chinese credit boom at the moment, social financing has been growing strongly in the last few months… ( but) I think we’re starting to run into overbought territory,” said Oxford Economics Commodities Analyst Dan Smith. “On the supply side in zinc, the biggest concern is that the cutbacks that have been implemented by the likes of Glencore will come back if prices go too high.”

London Metal Exchange (LME) zinc surged more than 5% to $2,985 a ton, its highest since October 2007. It ended up 2.9% at $2,900. Lead jumped more than 7% to $ 2,576.50, its highest in more than five years. It ended up 5.5% at $2,523.

In Shanghai, zinc and lead surged as much as 7% while steel rebar rose to its loftiest since May 2014.

In a bid to tame speculation and surging prices, the Shanghai Futures Exchange will limit the size of positions taken by nonmembers in some steel rebar futures.

Sentiment in base and ferrous metals remained bullish, however.

Weekend data in China showed profit growth in the industrial sector picked up in October, suggesting a further strengthening of the world’s second- largest economy.

Also, the Organisation for Economic Cooperation and Development said it saw global growth picking up faster than previously expected in the coming months.

Zinc has surged nearly 80% this year on fears that closures and suspensions of major mines will lead to shortages. Lead is often mined in the same deposits as zinc.

Among other industrial metals, copper rose nearly 3% to a high of $6,045.50, its highest in just over a year. It was last bid up 0.02% at $5,880.

Aluminum ended down 0.6% at $ 1,747, tin closed up 0.6% at $ 21,050, while nickel ended up 0.6% at $11,635. —