LONDON: Zinc prices slid to their lowest in more than five months on Thursday, hit by rising inventories and worries over the impact from Chinese property sector woes.
Three-month zinc on the London Metal Exchange (LME) shed 0.8% to $2,382 a metric ton in official open-outcry trading, having touched $2,350 for its weakest since Aug. 24.
“The sentiment around Chinese property is getting more negative, which is definitely concerning,” said Dan Smith, head of research at Amalgamated Metal Trading.
“Markets exposed to Chinese property are going to do badly, which explains why zinc is the worst LME performer over the past week and month by a long way.”
LME zinc has shed 5.9% over the past month and 3.7% so far this week. The main use for zinc is for galvanizing steel, with half of global demand coming from the construction sector.
Weakness in the zinc market is also showing up in LME zinc inventories, which have climbed by 14% over the past 10 days to a one-month high. LME copper slipped 0.1% in official activity to a three-week low of $8,302 a ton as the dollar strengthened and investors worried about China’s economy. “In copper we have underlying bullishness, which is just being held back by all these worries about China,” Smith said.
The dollar index firmed after several Federal Reserve speakers gave a range of reasons for feeling little urgency to start easing US monetary policy soon.
A strong US currency makes dollar-priced commodities more expensive for buyers using other currencies. Tin was the best LME performer, rising 1% to $25,750 a ton after January shipments of refined tin from major producer Indonesia dropped by 99% year on year after miners suffered delays to work plan approvals. Smith said soldering metal tin was also supported by buoyant electronics sectors.
Trading activity across industrial metals was slow, however, with top consumer China about to enter the Feb. 9-16 Lunar New Year holiday. LME aluminium rose 0.7% to $2,237 a ton, nickel firmed by 0.1% to $16,000 and lead was down 0.4% at $2,091.
Source: Brecorder
