Shanghai zinc prices rise for sixth consecutive day as inventories plunge

BEIJING — Shanghai base metal prices mostly rose on Monday, with zinc climbing for a sixth day and hitting a two-week high as inventories in China languish at their lowest in a decade.

Zinc stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE) fell 11.8% last week to 30,800 tons, their lowest since October 2007.

Meanwhile, zinc inventories in warehouses approved by the London Metal Exchange (LME) have dropped for eight straight days.

“Zinc fell a lot previously. This time the rebound will be more obvious,” said Xu Maili, director of base metals research at Everbright Futures in Shanghai.

ShFE zinc has lost 15% yearto-date, weighed down by concerns over global oversupply and fears the US-China trade row will hurt demand for industrial metals.

The LME was closed on Monday for a public holiday.

FUNDAMENTALS

The most-traded zinc contract on the ShFE, for October, climbed as much as 2.2% to 21,385 yuan ($3,111.00) a ton, its highest since Aug. 10, and was up 1.8% by the mid-session interval. Threemonth LME zinc closed up 2.7% on Friday.

ShFE copper was trading higher for a second day, rising 0.7% to 48,800 yuan a ton.

Zinc’s sister metal lead added as much as 1.5% in Shanghai, touching its highest since July 30. Nickel was the lone laggard, falling as much as 1.7% to 107,910 yuan a ton.

ShFE aluminum gained as much as 0.9% to 14,865 yuan a ton, its highest since Aug. 9, as Chinese smelters’ costs rise. It then pared gains to 0.2%.

China Hongqiao Group, the world’s biggest aluminum producer, reported a 21% jump in first-half net profit despite lower revenues as it avoided a repeat of hefty impairments seen a year earlier.

As Australia’s big miners gear up for a new round of expansion after years of belt tightening, prices for everything from labor to fuel to equipment have begun to rise, driving up costs and eating into margins. —