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Mining Weekly reported that the zinc price hit a five-year low on the back of rising inventories and weak demand from China, the world’s largest consumer of the metal.
Mining Weekly reported that the zinc price hit a five-year low on the back of rising inventories and weak demand from China, the world’s largest consumer of the metal. Wednesday, LME zinc for three-month delivery was sitting at $1,637 per tonne, its lowest point since June 2010.
As quoted in the market news:
The base metal, used to rustproof steel, had outperformed in the base metals space until early this summer, when prices crashed.
Bank of America (BofA) Merrill Lynch Global Research on Tuesday said this sharp correction was influenced by a confluence of factors, including subdued global demand growth and record refined output in China.
Yet, steady deliveries of metal into the LME warehouses had perhaps been the most bearish dynamic, the banking group noted in a new report.
BofA stated in a report:
Given Glencore’s recent acknowledgement of reducing inventories, we believe the company is responsible for at least some of the zinc that has shown up on LME. Making a few assumptions, including Glencore usually holding around 10% of trading revenues in inventories, we believe the company may have held around 350 000 t of zinc stocks, close to the increases of LME stocks of around 239 000 t gross, or 149 000 t net since June 1.
In short, while more unreported stocks may become visible, there is scope for the relentless inflows to gradually subside.