SHANGHAI – Zinc extended its advance to the highest level in more than a year on concerns over a looming supply deficit.
The metal used to galvanize steel rose as much as 1.3% to $2 246 a metric ton on the London Metal Exchange, the highest since May last year, and traded at $2 241 by 3:03 p.m. Shanghai time. It added as much as 2.4% to 17 340 yuan ($2 589) on the Shanghai Futures Exchange.
Zinc has rallied 39% this year, outperforming other base metals, amid forecasts for a global shortage after supply cuts and mine closures. The metal may rise to $2 500 over the next six months as production trails demand, Goldman Sachs Group Inc. said last week. Stockpiles in warehouses tracked by the LME fell to 438 275 tons as of Monday, down more than a quarter from a peak of about 617 000 tons in September.
“Zinc has been resilient given ore supply tightness, which still hasn’t eased after the price rally, ” Wei Lai, an analyst with Cofco Futures Ltd., said by phone from Shanghai. “But with prices above 17 000 yuan, it might be time to be a bit cautious.”
Nickel fell from the highest close in almost nine months, even as the new Philippine administration shows signs of delivering on its vow to crack down on the mining industry, shuttering producers that don’t meet environmental standards. The country is the world’s biggest supplier of nickel ore to China.
The metal used in stainless steel declined 0.7% to $10,475 a ton after jumping as much as 1.1% earlier. On Monday, it gained 2.6% to $10,545, the highest close since Oct. 28. In Shanghai, prices climbed 1.3%, paring an earlier advance of 3.6%.