Zinc hits lowest point so far for 2018 as equities jump, US metal tariffs loom

LONDON — Zinc slid to its lowest this year on Monday, falling for a fifth consecutive session as inventories surged and concerns about proposed US trade tariffs weighed on metals used in steel manufacturing.

Zinc, which is used to galvanise steel, has fallen by nearly eight percent since peaking last month at $3,595.50 a ton, its highest in more than a decade.

The metal came under pressure last week, along with aluminum and fellow steel component nickel, after US President Donald Trump announced plans to impose hefty tariffs on imported steel and aluminium to protect US producers.

“It has always been our view that zinc prices would fall back quite sharply this year, regardless of what happened with steel, which is obviously a concern,” said Capital Economics analyst Caroline Bain. “It has had the most phenomenal rally and there was always scope for it to eke back. On the fundamental level we think mine supply grew strongly last year and we see more of that this year, so we see the market tightness easing.”

London Metal Exchange (LME) zinc closed 1.8% down at $ 3,296 a ton, having slid 4.2% last week in its biggest weekly retreat in three months. Zinc earlier hit its lowest since Dec. 28 at $3,273.50. Stocks of zinc in LME warehouses jumped by 59% on Monday to 209,050 tons, while on-warrant levels nearly doubled to 162,825 tons.

Other metals potentially affected by mooted tariffs were also under pressure. Nickel ended the day 0.10% lower at $13,430 a ton while aluminium finished 0.20% down at $2,145.

Some Chinese aluminum producers that shut smelters during a winter crackdown on pollution may not reopen this spring once output curbs are lifted.

LME aluminum spreads showed easing in supply tightness midyear when more China production is expected to come online.

LME copper closed 0.20% up at $6,910 a ton. Prices are expected to recover as manufacturing demand cranks up into the seasonally strong second quarter.

China aims to expand its economy by about 6.5% this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang had said on Monday.

Hedge funds and money managers cut net long positions in COMEX gold and copper contracts in the week to Feb. 27, US Commodity Futures Trading Commission data showed on Friday.

LME lead ended 0.90% down at $ 2,425 a ton while tin finished with a 0.30% gain at $ 21,550. —