Zinc Rebounds to a Five-Year High Amid Signs of Tight Supplies

(Bloomberg) -- Zinc rebounded with other industrial metals and touched a five-year high amid signs of tight ore supplies.

Glencore Plc’s zinc output in the first nine months was 30 percent lower than a year ago, the miner said Thursday. The company’s announcement Monday that it will shut a mine in Australia will further reduce supplies, Karvy Comtrade Ltd. said in a note. The metal is up 55 percent this year, the best performer on the London Metal Exchange, on depleting mines and cutbacks.

“Fundamentally zinc can gain,” given forecasts for a deficit, Karvy said.

Zinc for three-month delivery rose 2.5 percent to settle at $2,487 a metric ton at 5:51 p.m. on the LME, after touching $2,494, the highest since August 2011. On Wednesday, the price fell 1.6 percent, the biggest drop since Oct. 11. A weaker dollar, making commodities priced in the currency cheaper outside the U.S., also buoyed metals.

“Lending support to the prices is weakness in the U.S. dollar along with hopes of upbeat demand from China and supply tightness in the physical market,” Kotak Commodities Services Ltd. said in a report Thursday. “Prices may further seek support from a steady decline in stocks at LME warehouses.” Zinc inventories monitored by the LME fell 200 tons on Thursday.

Industrial metals in London ended a seven-day rally on Wednesday, their longest run of gains since May 2015, as a tightening U.S. presidential race between Donald Trump and Hillary Clinton led investors to buy havens like gold and sell riskier assets.

Nickel prices rose 1.6 percent, taking this year’s gain to 19 percent this year on concerns over environmental audits at mines in the Philippines.

“Funds still like chasing zinc and nickel after yesterday’s slump as the investment logic remains,” Wei Lai, an analyst at Cofco Futures Ltd., said by phone from Shanghai.

Aluminum, copper, tin and lead also advanced on the LME.

--With assistance from Luzi Ann Javier To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net. To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Joe Richter

With assistance from Winnie Zhu