Metals News
Zinc Heads for Best Week in a Month on Chinese Supply Concerns
smm insight
13:16PM
Source:SMM

SINGAPORE, Nov. 20 -- Zinc climbed for the first time in four days and is headed for its best week in a month on speculation China's worst snowstorms in decades may have reduced supplies in the largest producer and consumer of the metal.

    Futures surged to an 18-month high in Shanghai as the storms raised concern that power cuts and transport problems may slow production and deliveries. More than 640,000 people in China's Anhui province faced power shortages due to heavy snow, the official Xinhua News Agency reported yesterday.

    "Investors are shifting their attention to zinc, which has had its bullish fundamentals exaggerated by speculators," said China International Futures (Shanghai) Co. analyst Wang Zhouyi. "I doubt the rally has legs because we've not heard of any major disruptions to supplies because of the weather."

    Zinc for delivery in three months on the London Metal Exchange gained as much as 2.7 percent to $2,274 a metric ton, and traded at $2,260 at 11:45 a.m. in Singapore. It is up 4.2 percent this week, the most since the week ended Oct. 23.

    Zinc for February delivery on the Shanghai Futures Exchange climbed as much as 1.4 percent to 18,120 yuan ($2,654) a ton, the highest since May 26, 2008. It last traded at 17,965 yuan.

    China suffered an estimated 151.65 billion yuan in direct economic losses 20 months ago when the country's south was hit by the most severe snowstorms in 50 years.

    Power grids were knocked out and millions of travelers were stranded during the annual Lunar New Year celebrations, forcing thousands of factories to stop work. Industrial production in the first quarter of 2008 expanded at the slowest pace in more than a year and zinc prices surged 15 percent in two months.

    Among other LME-traded metals, copper rose 0.8 percent to $6,849 a ton, aluminum gained 0.4 percent at $2,040 a ton, lead climbed 1 percent to $2,355 a ton and nickel gained 0.4 percent to $17,050 a ton. Tin was yet to trade.

    (Source: Bloomberg)

 

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