Zinc advances to 3-year peak

China , Commodities , Metals , USA , Zinc Jul 09, 2014 No Comments

ZincZinc for delivery in three months on the London Metal Exchange climbed as much as 1.1% to $2,288.75 per tonne, the highest since August 31st 2011 and traded at $2,286.75 in Hong Kong. The metal used for galvanizing steel has risen about 10 percent so far this year, lifted by expectations that mine closures and declining ore grades would lead to shortages.

The price of zinc continues to rise on speculation of increased demand for the metal particularly in cars, as auto sales in the U.S. and China continue to grow.

Zinc stockpiles monitored by the London Metal Exchange have dropped 29 percent this year to the lowest since December 2010. Auto sales in China climbed 14 percent in June, an industry group said yesterday. In the U.S., new-vehicle demand surged in May and June, Bloomberg Industries said.

“Demand, particularly in the U.S., probably picked up,” Patricia Mohr, a commodity market specialist at Scotiabank Group in Toronto, said in a telephone interview. “We’re seeing a bit of a recovery in industrial production in the U.S., largely linked to strong auto production. It’s probably reasonably good in China as well.”

China galvanises 4% of the steel it produces, far less than the 18% average used in the Western World. Inevitably, China will increase this amount when they target export markets and strive to meet Western standards. China used close to 5,500 tonnes of zinc in 2011, which is four times as much as a decade ago, and a staggering ten times more than twenty years ago.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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