Zinc nears three-month high on falling stocks

LONDON — Zinc and copper prices touched a near threemonth high on Tuesday as the dollar lost its luster, while zinc also benefited from a decline in exchange stockpiles.

Benchmark zinc on the London Metal Exchange ( LME) closed 1% higher at $2,747 per ton while copper ended up 1.10% at $5,858. Both metals earlier touched their highest since April 7.

“Fundamentally, zinc is very strong,” Sucden Financial analyst Kash Kamal said, adding that the technical picture also suggested further upside for zinc prices.

TIGHTER MARKET

Industrial metals were helped by a softer US currency, which makes dollar-denominated metals cheaper for non-US firms when it falls, potentially boosting demand.

Chinese iron ore prices surged by 6% to one- month highs in a late burst of short covering and fresh buying that lifted steel and raw materials as investors bet on rising demand.

Canceled warrants — zinc earmarked for delivery — at more than 70% of LME stocks at 299,875 tons are fueling concern of a tight LME market.

Total stocks at eight-year lows are also down 35% since October last year.

Premiums for zinc held in China’s bonded zones are near their highest levels this year at $195-$200 from about $130 earlier this year.

The discount for cash over the three- month contract has narrowed to near zero from around $20 a ton on June 12, another sign of a tighter LME market.

Resistance for zinc is around $ 2,770, a Fibonacci level, said Marex Spectrons’ Alastair Munro.

PHILIPPINES WATCHED

LME nickel ended up 2.50% at $9,260, its highest daily percentage jump in nearly three months.

The nickel market is watching the Philippines where the environment minister may decide next month on the fate of dozens of mining operations and contracts that his predecessor ordered closed, suspended or canceled.

Japanese aluminum buyers have agreed to pay producers a premium of $118-119 per ton for metal shipped during the July to September quarter, five sources directly involved in the pricing talks said.

Benchmark aluminum ended up 1.10% to $ 1,882, rebounding after touching its lowest in over three months on Monday. Tin was flat at $19,280 and lead rose 1.40% to $2,286. —