Zinc’s Price Climbs on Fall in Live LME Warrants

By the CRU Zinc Analysis Team

After reaching a 3-month high above $2,700/t on Oct. 24, zinc’s price shed $200/t in a matter of days as a tech stock rout caused shares to plunge in Asia and the USA, compounded by concerns over the outlook for global trade and economic growth. The tide briefly turned for zinc’s price on news of constructive trade talks between the USA and China, which caused the dollar to weaken markedly and it recovered to the high $2,500s, but profit-taking quickly reversed its fortunes with losses of almost $100/t on Nov. 5. With little support from the Chinese market since the closing of the import arb (zinc’s price was lifted by the positive arb in October), zinc’s price retreated below $2,500/t in recent days, despite the ongoing drawdown of LME stocks. The strong negative correlation between TCs and zinc’s price, which started in 2015, is still in evidence and goes some way to explaining the downward pressure zinc has been under even as LME stocks fell to a 10-year low.