Zinc Reaches Six-Year Low, Leading Metal Losses on China View

  • Metals slump after weaker-than-expected China inflation data
  • Production-cut announcements are failing to reverse slide

Zinc dropped to the lowest since 2009, leading declines in industrial metals after weaker-than-expected inflation in China added to concern about slowing growth.

Chinese equities fell the most in a week after the inflation figures, the latest data to show monetary easing is failing to arrest a deepening economic slowdown. The country is the world’s biggest metals consumer. All six main contracts on the London Metal Exchange declined.

China’s slowest economic growth in more than two decades has cut demand and added to an oversupply of metal. Zinc dropped for a fifth day, the longest run since July. Nyrstar NV on Monday said it may suspend up to 400,000 metric tons of mined output if prices stay depressed. Shares of the company, Europe’s largest refined-zinc producer, have fallen 46 percent this year in Brussels trading.

"It’s very hard to be bullish now," Gianclaudio Torlizzi, a partner at T-Commodity, a Milan-based consultancy, said by phone from Shanghai. "There isn’t enough demand yet to push prices up. The sentiment in China is still weak."

Zinc for delivery in three months fell 2.3 percent to settle at $1,607 a metric ton at 5:50 p.m. local time on the LME. Prices touched $1,576, the lowest since July 2009 and are down 26 percent this year.

Copper dropped as much as 1.2 percent to $4,904.50 a ton, the lowest since Aug. 26. China’s imports of the metal will probably fall after a benchmark premium in Shanghai slumped 40 percent in the past two months, a further sign of weakening demand. The Yangshan premium, a barometer of supply and demand in the bonded warehouse zone, dropped to the lowest level since July after copper imports surged to a 20-month high in September. Aluminum, nickel, lead and tin also retreated on the LME.

Copper futures traded on the Comex in New York declined for a fifth session, the longest streak since July.

Anglo American slipped more than 6 percent to the lowest since at least 1999 in London, the fourth-biggest decline in the Bloomberg World Mining Index. Shares of Freeport-McMoRan Inc., the top publicly traded copper producer, fell for a fifth day, the longest slump since August.

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