Zinc Hits Decade-High as China Data Boosts Metals Demand Outlook

(Bloomberg) -- Zinc prices hit a decade-high Friday on tighter supply concerns before settling lower on the day.

The metal used to galvanize steel posted a fifth straight weekly advance, the longest run in 13 months. Most metals gained on the week, with aluminum jumping 1.8 percent Friday as Chinese trade data increased optimism on demand. Higher prices helped a gauge of mining stocks reach the highest in almost five years.

Base metals are near multiyear highs amid solid trade data that shows China, the world’s top user, continuing to gobble up commodities while also increasing exports last month -- signaling healthy demand elsewhere. Prices are also getting support from the dollar’s selloff, which is making metals cheaper for major consumers outside the U.S., such as China.

“From the macro point of view, this is not an environment where you’d want to be shorting metals,” Michael Widmer, head of metals research at Bank of America Merrill Lynch, said by phone from London.

Zinc slipped 0.1 percent to $3,383.50 a metric ton at 5:51 p.m. on the LME, bringing gains for the week to 0.9 percent. Low treatment charges for concentrates, high physical delivery premiums for refined metal and low stockpiles all point to a tight market, Widmer said. LME inventories fell for a 13th week, reaching the lowest level since October 2008.

In other metals and mining:

• Aluminum rose as much as 2.5 percent amid expectations that the U.S. Commerce Department may soon impose tariffs on imports.
  • The price climbed even as data shows Chinese aluminum shipments reached a five-month high in December.
• Copper slipped 0.4 percent to settle at $7,110 a ton.
  • “The physical market has not tightened as much as prices would suggest,” Widmer said.
• The FTSE 350 Mining Index added as much as 0.5 percent to the highest since February 2013.

--With assistance from Susanne Barton

To contact the reporter on this story: Mark Burton in London at mburton51@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Joe Richter, Steven Frank

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