LONDON, Oct 10 (Reuters) – Zinc dipped on Wednesday, having earlier risen back towards the 3-month high reached last week on shrinking inventories and as smelter cuts in China lifted the market. Zinc inventories in LME-registered warehouses fell to 194,575 tonnes from more than 250,000 tonnes in August and are nearing 10-year lows. Stockpiles in Shanghai Futures Exchange storehouses at 29,204 tonnes are the smallest since 2007. Production cutbacks at China’s zinc smelters in response to tighter environmental checks and weaker profits have tightened supply. But going forward, the bullish picture for zinc gets more murky, according to Casper Burgering, analyst at ABN Amro. “There’s been investments (in zinc mining that) are expected to come onto the market in 2019. That will shift the market balance. In the short term prices could maintain these levels but (in 2019) price pressures will build.”
ZINC: Three-month zinc on the London Metal Exchange was last bid down 0.4 percent in official midday rings at $2,668, having hit $2,715, nearing last week’s three month high. The metal used to galvanise steel has surged 18 percent from August’s 22-month low of $2,283.
DEMAND: Demand for refined zinc will exceed supply by 322,000 tonnes this year and 72,000 tonnes in 2019, the International Lead and Zinc Study Group (ILZSG) said on Monday. “Zinc, along with nickel, has been the major beneficiary of ferrous moves. But (it) should run into major resistance between $2,728-52 – the high from Oct 2,” said Marex Spectron in a note. “Whilst we do advocate owning dips, the path higher will remain strewn with rocks … (as) the macro pall hovers over the complex.”
CHINA STOCKS: China’s blue-chip index fell for a third consecutive day, but the main Shanghai Composite index rose as investors weighed government support for continued growth against the impact of the U.S.-China trade war.
SPREAD: The premium of cash zinc over the three-month contract rose to $41.50, reversing recent falls and signalling a lack of nearby supply.
SHFE: The Shanghai Futures Exchange will add lead, zinc 0#SZN:, tin 0#SSN: and nickel 0#SNI: to its new physical trading platform from Oct. 18, the exchange said in a statement on Wednesday.
COPPER RESTART: BHP, expects a plant at its Olympic Dam mine to restart this month following repairs and the company has found a way to deliver returns from the asset as part of a focus on maximising productivity. PRICES: Copper traded down 0.1 percent in rings at $6,283 a tonne, aluminium was last bid down 0.9 percent at $2,036, lead was last bid up 0.1 percent at $1,937, nickel was last bid down 1 percent at $12,890 while tin was last bid up 0.4 percent at $18,975.