Zinc Hits 14-Month High In Broad Commodity Rally

LONDON, Oct. 9 -- Zinc surged over 8% Thursday to a fourteen-month high, and other metals powered higher as well Thursday as rallying equities markets swept the metals higher and triggered heavy short-covering.

    Zinc closed 7% higher on the day, lead was up 6%, nickel 4.5% and copper 4%.

    Sentiment was buoyed by a decline in U.S. jobless claims last week and a 1.3% drop in U.S. wholesale inventories in August. A return to profit by U.S. aluminum producer Alcoa in the third quarter also lifted confidence, traders said.

    "The same old story, improving corporate and economic data just pushing people into risk trades," Thurtell said.

    Zinc's rally accelerated after it rose above a key psychological resistance at $2,000/ton and triggered short-covering that carried it above $2,100/ton, traders said.

    Thurtell said there was little of the producer forward selling that has weighed on zinc in recent months. "There was nothing to sell into, so it had no way to go but up."

    Aluminum benefited from positive remarks on Chinese demand from Alcoa's chief executive, who said Chinese demand is likely to grow 4% in 2009. The CEO also said demand outside of China has improved substantially from the very weak first half.

    Chinese financial markets reopen Friday after an eight-day public holiday, creating some uncertainty among market participants of how they'll react to the gains metals have made in their absence.

    While metal futures on the Shanghai Futures Exchange will have to rise upon the open to match LME metals, whether or not they hold onto those gains will be key, said a senior trader in London.

    (NASAAC)

    (Source: Dow Jones)