Most Metals Ease After Surge That Took Zinc to Highest in DecadeBy
Rising global growth, weaker dollar have driven metals’ gains
Questions remain over support from physical demand: Kingdom
Most industrial metals eased back after a rally that took zinc to the highest level in almost 10 years on signs of supply curbs and faster economic growth around the world.
Zinc slipped 0.6 percent to $3,101.50 a metric ton by 10:56 a.m. on the London Metal Exchange after earlier touching $3,147. The metal soared by its daily limit to 25,975 yuan a ton on the Shanghai Futures Exchange. Its rally was spurred by data showing China’s daily production in July contracting to the lowest level in three years.
Copper on the LME rose to a near three-year high, before slipping 0.3 percent to $6,510.50 a ton. Aluminum also pulled back from its strongest level in almost three years, while tin and nickel traded higher.
Questions remain over whether physical demand will "support this rally come September or October or will the market have gone too far too fast," said Malcolm Freeman, a director of West Malling, England-based brokerage Kingdom Futures.
The world economy is on its way to a year of faster growth after rising at its most rapid pace in 2 1/2 years in the second quarter, with previous laggards such as Japan and the euro area now recovering. Metals have also been given a fillip by a weaker dollar, down 8 percent this year against major currencies.
“On the macro front, prices seek support from weak U.S. dollar and upbeat risk appetite,” Kotak Commodities Services said in a note.
— With assistance by Martin Ritchie, Winnie Zhu, and Jasmine Ng