Zinc prices rise to highest in a decade as industrial metals surge

LONDON — Zinc prices surged to their highest in almost a decade on Wednesday while aluminum and copper hit their highest since 2014 as rises across most industrial metals triggered pre-set buy orders and a wave of speculative buying.

“Momentum funds are buying the strength, piling in as the price rises,” said a metals trader in London, adding that forward selling by producers keen to lock in a high price was limiting gains.

The rallies had been supported by expectations of strong global demand and tight supplies, said Danske Bank analyst Jens Pedersen. “(But) these levels are likely too high from a market fundamental point of view,” he said.

Benchmark zinc on the London Metal Exchange (LME) closed up 5.40% at $3,119 a ton, on track for its biggest gain since November and rising above the key technical level of $3,000 for the first time since October 2007.

The metal used to galvanize steel is benefiting from Chinese infrastructure development and higher steel prices caused by capacity cuts, ANZ analyst Daniel Hynes said. Chinese traders were also diverting money from steel to zinc on the Shanghai Futures Exchange after a hike in steel trading fees. Strong growth in the world’s largest consumer of metals showed signs of fading in July but a construction spree kept activity solid, while the International Monetary Fund raised its 20182020 average growth forecast.

China’s zinc production fell in July, while lead output rose.

Supporting prices was a fall in on-warrant zinc available to the market at LME-registered warehouses of 5,500 tons, to 149,700 tons. Headline zinc stocks have tumbled 41% this year.

Three- month LME aluminum ended up 2.20% at $2,094 a ton after hitting $2,104.50, the highest since September 2014.

Aluminum output in China fell 8.20% in July as capacity cuts started to take their toll. China makes more than half the world’s aluminum.

The country’s biggest producer, China Hongqiao Group, shut 2.68 million tons of capacity.

Tight supplies on the LME market created a premium for the cash over three-month contract for the first time since February. The premium was $6 a ton.

Flash floods left one worker missing and damaged a power plant at a facility operated by US-owned miner Freeport in Indonesia.

Benchmark copper finished 2.40% higher at $ 6,532 having touched $ 6,576.50, the highest since November 2014.

Nickel ended up 4% at $10,760, lead ended up 5.80% at an eightanda- half- month- high $ 2,517 and tin closed down 0.40% at $20,025 a ton. —