LONDON — Zinc prices rose on Monday as a rapid fall in the amount of metal available in the London Metal Exchange (LME) warehouse system added to fears of supply shortages.
Benchmark zinc on the LME was up 1.6% at $4,408 a tonne in official trading. The metal used to galvanize steel is up about 25% this year after rising 28% in 2021 and touching a record high last month.
“Zinc stocks are already very low,” said ING analyst Wenyu Yao. “There’s not much of a buffer.”
Trading volumes were low, with Chinese financial markets closed for a public holiday until Wednesday.
STOCKS: On-warrant inventories of zinc in LME-registered warehouses fell to 78,125 tonnes, the lowest since May 2020 and down from about 130,000 tonnes in mid-March.
SUPPLY: High energy prices have forced some zinc smelters in Europe to curtail production and Russia’s demand for payment for gas in roubles has raised fears of supply shortages or still higher prices.
UKRAINE: Germany said the West would agree to impose more sanctions on Russia in the coming days as nations around the world expressed outrage over civilian deaths in Ukraine.
CHINA: COVID-19 lockdowns could curb metals demand in China, but traders are hopeful of stimulus to support economic growth.
Analysts at ANZ said China’s coronavirus outbreak “has already led to a slowdown in the domestic movement of base metals” and production cuts at metal fabricators as a result.
REVIEW: The LME said it would limit daily price moves to 15% for all its metals and commission an independent review into chaos in the nickel market last month.
British financial regulators said they would also review the LME’s handling of the nickel market last month.
PRICES: LME copper was down 0.3% at $10,322 a tonne, aluminum rose 0.3% to $3,459, nickel gained 1% to $33,550, lead fell 1% to $2,425 and tin was down 0.6% at $44,500.
(Reporting by Peter Hobson Additional reporting by Enrico Dela Cruz in Manila Editing by David Goodman)
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