Zinc prices advanced significantly at the close of the week’s trading, underpinned by fears of further smelter closures in China owing to high power prices in the world’s second-largest economy.
Three-month zinc on the London Metal Exchange (LME) was up 1.9 percent to $2,986 a tonne as supplies of the commodity plunged.
Commenting on this, Caroline Bain, chief commodities economist at Capital Economics, said the supply side has really deteriorated in zinc, which is one of the few metals that have quite a big production base in Europe.
“It has been particularly hard hit by closures and I think there’s probably more to come on that front,” Bain said.
Other metals also traded bullish after factory activity in top metals consumer China expanded unexpectedly in September, returning to growth after two consecutive months of contraction. However, a possible LME ban on Russian metal including nickel, aluminium and copper further exacerbated supply concerns.
LME aluminium was up 0.8 percent to $2,215 a tonne, lead advanced 0.5 percent to $1,886 a tonne, nickel gained 1 percent to $22,560 a tonne, and tin rose 1.3 percent to $20,780 a tonne.
Meanwhile, LME copper added 0.7 percent to $7,595 a tonne but is set to end the quarter with a loss of about 8 percent, pressured by dollar strength while the U.S. Federal Reserve raised interest rates and China grappled with COVID-19 shutdowns.
Also supporting the market was data showing copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) dropped to 30,459 tonnes at the end of the week for their lowest since January 21 and down 54.3 percent from 66,661 tonnes on July 1.
