Zinc drops to over 3-1/2-year low on high inventories

LONDON zinc prices dropped to their lowest in more than threeand-a-half years on Monday, as high stockpiles raised fears of weak demand amid a rapid spread of coronavirus beyond China.

Three-month zinc on the London Metal Exchange (LME) dropped as much as 2.3% to $2,066.50 a ton, its lowest since July 2016, while the most-traded zinc contract on the Shanghai Futures Exchange (ShFE) fell up to 2.4% to 16,620 yuan ($2,365.67) a ton, its lowest since August 2018.

Inventories in warehouses tracked by ShFE jumped to a near two-year high of 143,164 tons on Friday, while LME stocks hovered around their highest level since August 2019, exchange data showed.

“The trend is likely to continue in the short term as plant and business restarts in the country have been slow so far,” ING said in a report, adding that rising ShFE stocks pointed to a demand slowdown.

The discount of the LME cash over the three-month contract widened to $19 a ton, its biggest since September 2018, indicating abundant nearby supplies.

LME copper touched a twoweek low of $5,680 a ton; aluminum fell 0.8% to $1,700.50 a ton by 0556 GMT; nickel rose 0.7% to $12,615 a ton; and lead rose 0.3% to $1,836 a ton.

Copper fell 0.5% to 45,820 yuan ($6,521.96) a ton; aluminum declined 0.9% to 13,485 yuan a ton; nickel dropped 0.4% to 102,650 yuan a ton; while tin rose 1.4% to 137,350 yuan a ton.

Fears grew that the coronavirus outbreak in China will grow into a pandemic with disruptive and deadly consequences for countries around the world, after sharp rises in infections in South Korea, Italy and Iran.

The China Council for the Promotion of International Trade said 3,325 force majeure certificates have been issued to protect firms from legal damages stemming from the coronavirus outbreak as of Feb. 21, covering a total contract value of around 270 billion yuan. —