Drooping inventories and market optimism surrounding US-China trade talks boosted zinc prices on Wednesday.
As US and Chinese officials are set to have another go at trade talks this week, zinc prices found themselves growing on heightened optimism in the marketplace.
While the commodity later closed at 22,210 yuan, it had still managed to climb from the day’s opening price of 21,535 yuan.
Meanwhile, on the London Metal Exchange (LME), zinc stocks opened at 56,425 tonnes, marking their lowest point since 1991. In a note obtained by the outlet, Jinrui Futures said zinc ingot inventories are “extremely low” and “intense docking” is set to happen over the next two to three months as China’s consumption of the metal recovers.
As of Tuesday (March 26), zinc was trading on an upswing at US$2,905 per tonne on the LME, up 2.3 percent from Monday’s (March 25) US$2,838 mark. However, despite supply being a growing concern on Wednesday, three-month zinc was down 0.5 percent in London at US$2,858 by 7:30 a.m. GMT.
While US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to kick off trade talks in Beijing on Thursday (March 28), some experts are hesitant about when a deal could actually come through.
“It would be surprising to me if we did not have more fits and starts, more stop-and-go in these trade talks given the wide range of issues at stake and given the complexity,” Partners Group Chairman of the Americas Charles Dallara told CNBC on Wednesday.
“I see late May, June more as kind of the realistic time frame than I see anything in April. If we move into that time frame, I think some understandings will be reached, and I think that will be a critical step forward,” he commented.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.