(Bloomberg) -- Zinc rallied to the highest since April 2019, lifted by concerns over falling Chinese production and as hopes for a U.S. stimulus deal buoyed market sentiment.
Refined zinc output in China, the top producer, fell to 562,300 tons last month, down by 6,900 tons from October, Shanghai Metals Market said, citing a monthly survey of smelters. Production is expected to drop further in December as falling processing fees crimp margins, according to the researcher. Treatment charges for Chinese smelters to process zinc concentrate slumped to the lowest level in more than two years.
Supply constraints have helped fuel a 70% rebound in prices from a March low, even as demand took a hit in the early stages of the coronavirus pandemic. Since June, demand for both zinc and lead has bounced back, led by a recovery in China, Trafigura Group Ltd., the world’s second-biggest independent metals trader, said on Wednesday.
“Europe has also recovered well and we see continued pickup across all markets into the fourth quarter,” Amin Zahir, Trafigura’s head of metals and minerals trading, said in an earnings statement. “We remain positive about demand for both metals on a forward-looking basis, with continued support from both construction and automotive industries.”
Zinc and copper have surged about 25% this year, leading gains among six base metals on the London Metal Exchange, as China leads a global economic rebound from the coronavirus pandemic.
All metals traded higher as equities climbed after a fresh record for U.S. stocks, and hopes for a stimulus deal tempered concerns about a surge in virus cases. Treasury Secretary Steven Mnuchin presented a new $916 billion Covid-19 relief proposal to House Speaker Nancy Pelosi, who hailed progress in the negotiations but deemed parts of the plan as “unacceptable.”
Zinc rose 1.6% to $2,844.50 a ton as of 1:42 p.m. on the LME, advancing for a fifth day. Copper added 0.5% to $7,734 a ton and aluminum climbed 2.6% to $2,041 a ton.
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