Zinc Drops to Lowest Since '10 on Inventories as Metals Retreat

Updated on
  • Stockpiles of zinc in New Orleans climb in past six weeks
  • China's imports of nickel drop as stainless steel output slows

Zinc extended losses to the lowest level in more than five years on rising global stockpiles. Industrial metals fell amid renewed concern over slowing economic growth in China, the biggest consumer.

Prices of zinc used to galvanize steel fell as much as 1.5 percent to $1,633 a metric ton in London, the lowest since June 2010, before trading at $1,637 by 3:10 p.m. in Shanghai. 

The Asian Development Bank reduced its growth forecasts for China and said its declining appetite for energy, metals and other raw materials would hurt commodity-focused export economies like Mongolia and Indonesia.

“Fundamentals of all the metals are weak on slowing demand in China and investors don’t believe consumption will recover quickly in the fourth quarter,” Li Qi, the chief metals analyst at Cofco Futures Co., said by phone from Shanghai. “Zinc is under the spotlight these days partly because global inventories surged.”

Stockpiles in New Orleans, which account for more than three-quarters of all zinc tracked by the London Metal Exchange, jumped 57 percent since Aug. 10, boosting global inventories to the highest since February. With demand weak, metal for immediate delivery is trading near the biggest discount to later contracts in almost two years.

Nickel retreated after China’s imports of the refined metal slumped to the smallest in four months. Purchases shrank 60 percent to 18,774 tons from July, when imports were the second highest on record, according to China’s customs administration on Monday. Credit Suisse Group AG and Citigroup Inc. are among banks that have cut price forecasts because of the weak outlook for demand in the world’s second-largest economy.

Copper in London declined 1 percent, lead fell 0.7 percent and tin lost 2.3 percent. The copper market had a surplus of 15,000 tons in the first six months compared with a deficit of 576,000 tons a year earlier, the International Copper Study Group estimates.

The Shanghai Futures Exchange will start charging fees from Tuesday for closing out positions opened on the same day for nickel futures, according to a statement on the bourse website, which didn’t give the amount.

— With assistance by Alfred Cang

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