Zinc Enters Bull Market on Supply Shortfalls; Miners Advance

  • Tighter supply and steel rally fuel recovery in zinc prices
  • Zinc is the “brightest” of the London metals: Macquarie

Zinc rallied to the highest since October, entering a bull market, after production cuts tightened global supplies. Copper advanced, helping push Freeport-McMoRan Inc. higher.

Zinc has soared more than 20 percent from a six-year low reached in January, after Glencore Plc and Nyrstar NV last year announced production cuts to cope with a slump in prices. The market will have a deficit of 440,000 metric tons this year, the most in more than a decade, according to Mitsui Mining & Smelting Co. Freeport led gains in the Standard & Poor’s 500 Index of equities as industrial metals climbed.

“Zinc has one of the most favorable supply and demand balances,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “It’s not surprising to see it outperform on the upside.”

Zinc added 2.1 percent to $1,781 a ton by 5:50 p.m. in London. That represents an increase of more than 20 percent from its Jan. 12 closing low, meeting the common definition of a bull market. The Bloomberg Industrial Metals Subindex rallied 2 percent.

Freeport shares climbed as much as 15 percent to $7.97 in New York, the highest since Dec. 3. Prices are up 16 percent this year, after plunging 71 percent in 2015. A gauge of 18 large global base metal producers rallied more than 8 percent to the highest since November.

  • Copper rose in London and New York, while aluminum and nickel also gained on the LME. Lead and tin fell.
  • Glencore climbed 12 percent in London to the highest since October, BHP Billiton Ltd. advanced more than 9 percent and Teck Resources Ltd. surged 16 percent.
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