Zinc Drops as Investors Take a Break From Year’s Best Commodity

  • Price decline ‘nothing to worry about’: ABN Amro’s Burgering
  • The metal has surged 45% this year on outlook for shortage

Zinc had the biggest loss in six weeks as some investors closed out bullish bets on this year’s best-performing major commodity.

The metal slumped as much as much as 1.9 percent, after touching a 15-month high on Monday. Zinc has rallied 44 percent this year on expectations of a supply shortage after mine closures from Australia to Ireland. The advance pushed it near a technical level that suggests to some traders that prices may be poised to retreat.

“Perhaps some investors are taking profits,” Casper Burgering, an analyst at ABN Amro Bank NV in Amsterdam, said by phone. “I don’t think that’s something to worry about. We expect for the coming two years deficits in zinc and that’s keeping prices high.”

Zinc for delivery in three months fell 1.7 percent to settle at $2,321 a metric ton at 5:54 p.m. on the London Metal Exchange. Its 14-day relative-strength index approached 70 Monday, a level indicating prices may be overbought.

Tomorrow is the first Wednesday of the month, when option contracts on the LME expire. The most widely held popular bullish option on zinc is for a gain to $2,400, according to LME data.

“Watch for a move higher as option participants look to hedge their exposure to the $2,400 strike,” Keith Wildie, a partner at brokerage Vantage Capital Markets LLP in London, said by e-mail.

In other metals news:

  • Aluminum rose 0.6 percent after touching the lowest since mid-June on Monday, while copper slipped 0.1 percent.
  • Goldman Sachs Group Inc. said aluminum and copper may drop in the second half on slowing demand growth and rising supply.
  • Copper futures for December delivery gained 0.5 percent to $2.089 a pound on the Comex in New York. Comex trading was closed Monday for the Labor Day holiday.
  • A gauge of 18 global base-metal producers tracked by Bloomberg Intelligence climbed for a fourth session, led by Teck Resources Ltd.
  • Nickel and tin also advanced, while lead slipped on the LME.
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