Zinc fell to the lowest level since November on the London Metal Exchange as commodities and equities tumbled after Standard & Poor’s cut the U.S. credit rating, spurring concern about demand.
Zinc paced declines in the Standard & Poor’s GSCI Spot Index of 24 commodities, which fell as much as 2.8 percent. The U.S. economy is heading into a “double-dip” recession, Nouriel Roubini, the co-founder and chairman of New York-based Roubini Global Economics LLC, said in an interview on Bloomberg Television.
“Zinc currently exhibits the weakest fundamental data,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “Furthermore, the dive below $2,100 means that an important technical level was broken that has probably intensified the down move. We will probably see prices below $2,000.”
Zinc for three-month delivery on the LME dropped as much as 7.5 percent to $2,034.25 a metric ton, the lowest level since Nov. 17. It traded at $2,075.25 by 4:40 p.m. London time.
Zinc inventories monitored by the LME have remained above 880,000 tons after rising to 894,825 tons on July 11, the highest level in more than 16 years, according to daily exchange figures.
Zinc is poised for a 422,000-ton surplus this year, according to Briesemann.