Zinc Tumbles Most in 10 Months on Stronger Dollar, Weaker Crude

  • All industrial metals under pressure; mining stocks decline
  • Investors boost wagers Federal Reserve to hike rates this year

Zinc declined the most in 10 months, leading a drop in industrial metals, as the dollar advanced and crude oil fell.

The greenback rose against a basket of 10 currencies as investors boosted wagers that the Federal Reserve will raise U.S. interest rates this year. A stronger dollar curbs demand for commodities as alternative investments. Lower energy prices decrease the cost of producing metals and curb investor appetite for index funds that own raw materials. U.S. equities also declined.

Zinc “is trading against the dollar flow and just a little bit of risk-off sentiment in the equity market that’s being helped by the lower oil prices as well,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview.

Zinc for delivery in three months declined 3.4 percent to $2,250 a metric ton at 5:50 p.m. on the London Metal Exchange, the biggest retreat since Nov. 27.

The metal for immediate delivery settled on Monday at a discount of $15.25 a ton to the benchmark three-month contract, the widest contango since January. The market structure may signal softening fundamentals, or point to rolling forward of positions by traders or index investors.

Zinc remains the best performer among the six base metals on the LME due to mine depletion and closures, gaining 40 percent this year. 

In other metals news:

  • Aluminum, copper, nickel, lead and tin also declined in London.
  • The Bloomberg World Mining Index slid 1.5 percent, led by declines in Alcoa Inc., which missed earnings estimates and cut forecasts for its parts businesses.
  • Copper futures for December delivery dropped 0.5 percent to $2.1855 a pound on the Comex in New York.

— With assistance by Winnie Zhu

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