One Metal Is Withstanding China-Led Pullback as Supplies Shrink

  • Zinc stockpiles on LME decline to the lowest since 2009
  • ‘People are still bullish in zinc,’ AMT’s Richard Fu says

As the industrial-metals rally wavers amid renewed concerns on Chinese demand, zinc is proving resilient.

Glencore Plc, the world’s largest miner of the metal, said this week that structural deficits are returning “due to resource quality and scarcity at current prices.” Zinc inventories in London dropped on Friday to 390,375 metric tons, the lowest since July 2009. Prices have jumped 17 percent this year, leading gains in industrial metals, after sliding 26 percent in 2015.

“People are still bullish in zinc,” Richard Fu, the head of Asia & Pacific at Amalgamated Metal Trading Ltd. in London, said in an e-mail. “The available stocks are low and prices are not expensive, and production is not booming.”

Zinc for delivery in three months gained 1 percent to settle at $1,889 a metric ton at 5:50 p.m. on the London Metal Exchange.

The price advanced 0.1 percent this week, while a gauge of the six main metals traded on the LME lost 3.5 percent, as aluminum, copper, lead, nickel and tin declined.

It was better to be in precious than industrial metals in equity markets this week. Bullion producer Eldorado Gold Corp. and silver miner Industrias Penoles SAB jumped 21 percent and 7.5 percent, respectively, while base metal-focused Teck Resources Ltd. and Freeport-McMoRan Inc. slumped more than 11 percent. The Bloomberg Americas Mining Index lost 2.8 percent, a second weekly retreat after five straight advances.

In other metals news:

  • Copper futures for July delivery slid less than 0.1 percent on Friday to $2.074 a pound on the Comex in New York. The metal lost 3.7 percent this week.
  • Copper analysts and traders were split on their outlook for prices, as five of 13 were bullish, six were bearish and two neutral in a Bloomberg survey this week.
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