Zinc notches up largest daily gain in a year; copper and lead hit one-year lows
LONDON — Zinc chalked up its largest daily gain in a year on Wednesday, recovering from this week’s one-year low on bargain hunting and falling inventories, while copper and lead hit oneyear lows as the dollar rose and trade tensions simmered.
Shanghai Futures Exchange (ShFE) zinc stocks dropped to 58,016 tons last week, their lowest since February 2008, while London Metal Exchange (LME) zinc stocks have fallen for six straight days.
“Basically the zinc market short term got oversold, so consumer buying has seen ( it) rally,” said Marex Spectron metals analyst Alastair Munro, who sees more selling risk ahead for base metals near term.
“People are trying to pick the lows but are getting weary of doing so. We’re macro driven, there’s uncertainty around trade tariffs and after a period where we’ve seen real money bail… what triggers the shorts to cover?”
Three-month zinc on the LME closed up 3.5% at $ 2,027 a ton, its largest one day gain since last August. The metal, which is used to galvanize steel, is down some eight percent this month, having hit a one year low.
Indicating near- term supply tightness in zinc, cash zinc traded at a premium of $26 a ton to the three- month price, up from an $8.50 premium a week ago.
Expectations for a rise in zinc concentrate supplies in coming years have driven the metal to one-year lows, but smelting capacity constraints suggest the sell-off is premature.
NAGGING CONCERNS
Copper closed flat at $6,150 a ton, having hit a year low at $6,080, while lead closed up 0.20% at $2,170, having hit a year low at $2,131.
“Concerns that the trade dispute between the US and China will escalate and fears that the economy in China is cooling are continuing to weigh on (metals) prices. In addition, prices are facing headwind from the firm US dollar,” Commerzbank said in a note.
World stocks hit a one-month high on Wednesday as strong company earnings and a bullish outlook from the head of the US central bank buoyed the dollar.
The US-driven trade war has become the biggest “confidence killer” for the global economy, China’s foreign ministry warned on Wednesday.
India’s southern state of Tamil Nadu will ask the nation’s environment court to dismiss a Vedanta Ltd. petition seeking to reopen its copper smelter.
Among other industrial metals, aluminum closed down 0.30% at $2,027, tin ended down 0.10% at $ 19,475 a ton while nickel closed up 0.90% at $13,615 a ton, having hit its lowest since April. —