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City of London

New Squeeze Hits London Metal Market With Zinc Spreads Spiking

  • LME inventories at a record low, placing strain on buyers
  • Exchange says it’s monitoring the situation in zinc closely

There’s a new supply crisis brewing on the London Metal Exchange, as plunging stockpiles of zinc leave buyers facing a huge premium to obtain spot metal.

The premium for spot zinc over futures spiked on Thursday to the widest since 1997, in a condition known as backwardation that is a hallmark feature of a supply squeeze. The sharp surge comes after inventories slumped this week to the lowest level in at least 25 years. The LME said it’s monitoring the situation closely.