JOHANNESBURG/NEW YORK – Zinc touched the highest in five years as the London Metal Exchange’s annual LME Week began with investors betting that a rebound in demand from China will underpin prices. Mining stocks also climbed.
Metals are extending their advance after China’s economy stabilised in the third quarter, expanding 6.7% from a year earlier, to bolster the outlook for commodities demand. Zinc prices have gained 53% this year amid a growing supply shortage.
“The strong zinc fundamentals remain unchanged in the past weeks,” Richard Fu, the head of Asia & Pacific at Amalgamated Metal Trading, in London, said in an e-mail. “The general macro economic figures in China recently are not bad.”
Zinc for delivery in three months rose 2.6% to settle at $2 458 a metric ton at 5:50 pm on the LME, after touching $2 479.50, the highest since August 2011.
Separately, local coal prices have spiked amid a supply crunch, boosting costs for metals production.
“Coal accounts for a big portion of aluminium production costs,” Jia Zheng, a trader at Shanghai Minghong Investment Management, said by phone from Shanghai, “The rally in metals may continue if coal holds on to its gains – investors who play macro or energy cards remain bullish.”
The Bloomberg Americas Mining Index rose 1.7%, helped by gains in Detour Gold and Yamana Gold. Aluminium, copper, nickel and tin also climbed on the LME. Lead was unchanged. Copper futures for December delivery increased 0.5% to $2.205 a pound on the Comex in New York. Copper may drop as recent gains are probably unsustainable, Barclays said in an e-mailed note. The bank cited weak demand in emerging markets outside China and signs of ample supplies even as exchange stockpiles drop.