LME base metals push upward on weaker dollar; zinc price recovers 2.2%

(MB) After a slight dip in the dollar index, base metals prices on the London Metal Exchange were up across the board during morning trading on Tuesday July 17, despite US-Sino trade tensions continuing to weigh on market sentiment. The slight downtick in the US currency comes ahead of a congressional testimony on the US economy and monetary policy by Federal Reserve chairman Jerome Powell, due to be delivered this afternoon. Leading the broad uptrend as a result, zinc prices climbed more than 2% during the morning session, after closing at their lowest level in over a year on Monday. “We regard the [zinc] price slide, which was presumably exacerbated by the withdrawal of speculative financial investors, as excessive. It is true that two new zinc mines went into operation in recent months and that production is being ramped-up there, meaning that more supply is available,” Commerzbank Research said in a morning note.

“While last year‘s supply deficit of 460,000 tons is set to decline to around 260,000 tons this year, it nonetheless remains sizeable. And even though the Chinese authorities are expected to order production cuts in the steel industry again, we do not believe they will be sufficient to pull the global zinc market out of the deficit,” it added.  Marginal upticks in nickel, tin and lead prices followed a 1% climb in aluminium’s three-month price, while copper prices ticked 0.7% higher on continued supply-side concerns.  Elsewhere, a potential economic slowdown in China after second-quarter gross domestic product growth came in lower than that recorded in the first three months of the year, has weighed on prices, while trade tensions and tariff threats continue to keep investors cautious.