Zinc prices hit their strongest level in nearly a month on Wednesday, amid worries about mine supply and shortages outside China.
Benchmark three-month zinc on the London Metal Exchange was flat at US$3,842 ($5,454.83) a tonne by 15:15 GMT, after touching US$3,874.50, its highest since 30 September.
Declining mine output has spurred record-low treatment charges for smelters and cutbacks of their refined metal output.
“Unless concentrate availability improves, Chinese refined output is unlikely to respond quickly enough to relieve tightness in international markets,” analyst Viktoria Kuszak at broker Sucden Financial, told a webinar.
While Chinese exports of the metal this year, mainly used for galvanising steel, relieved shortages elsewhere, it was unclear if that would be repeated, she said.
Near-term tightness was evident from the premium of LME cash zinc over the three-month contract, which has spiked to US$106 a tonne from US$45 last week.
While overall zinc inventories have recovered, there have been increasing notices from owners who want to withdraw their metal. The amount of available LME stocks has slipped 14% since last week.
Trade houses were involved in the zinc market, which could add to volatility, Robert Montefusco told the Sucden webinar.
“It’s a bit of a game right now, and the trade houses are controlling it. We’ll have to wait to see if these stocks are going to be used or just moved to another warehouse,” he said.
Record long and short positions among investment managers and funds have also fuelled the sharp moves.
LME aluminium climbed to its highest in four weeks before reversing gains after a Reuters report was published about Chinese producers’ ambitious overseas growth plans. It was last down by 0.8% at US$3,062 a tonne.
Among other metals, LME copper slipped 0.2% to US$14,449.50 a tonne, lead lost 0.9% to US$1,915, and tin dropped 1.7% to US$50,610. Nickel was little changed at US$15,630.
(Reporting by Eric Onstad; Additional reporting by Solomon Cefai in Singapore; Editing by Harikrishnan Nair and Shilpi Majumdar)
