(Bloomberg) -- Zinc rose as investors eyed a tightening supply outlook following a sharp rise in orders for London Metal Exchange inventories.

Futures on the LME settled 1.6% higher on Wednesday at $2,610 a metric ton on the LME, the highest price since Sept. 29.

The metal has rebounded this month after Trafigura Group’s Nyrstar said it would halt output at two US mines due to a slump in prices. Meanwhile, a facility at an eastern Siberian zinc mine run by Russian metals producer Ozernaya Mining Co. caught fire Wednesday, though its spread has been stopped, according to Interfax. Orders to withdraw zinc from exchange-monitored warehouses rose almost 80% this week.

Zinc prices are still down 12% for the year amid a slowdown in demand from steelmakers who use the metal in the galvanization process. That weakening reflects the struggles of the construction industry globally following a sharp tightening in monetary policy in the West and China’s chronic real estate turmoil. European steelmakers flagged a bleak demand outlook during their earnings in recent weeks.

The spot-price discount to LME futures has narrowed sharply since early October, a signal of growing demand for immediately deliverable metal.

--With assistance from Yvonne Yue Li.

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