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Zinc hits two-month peak on fears of shortages after Nyrstar move


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LONDON — Zinc prices surged to their

strongest in two months on Tuesday after production was

suspended at a Dutch smelter amid high power prices, stoking

fears of shortages.

Benchmark zinc on the London Metal Exchange jumped

6.6% to $3,797.50 a tonne by 1030 GMT, the highest since June 9.

Nyrstar said it would put its zinc smelting

operations at Budel in the Netherlands on care and maintenance

from Sept. 1.

Nyrstar had already cut output by up to 50% at its three

European zinc smelters while Glencore warned this month

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that “the current energy supply and price environment poses a

significant threat.”

“That theme is ongoing due to tightness in the electricity

and power market in Europe,” said Xiao Fu, head of commodity

market strategy at Bank of China International.

“Market inventories have fallen to very low levels and we

would expect stocks to continue to fall in Europe.”

Low water levels on the Rhine were an added concern, she

said.

Dutch gas for September hit the highest levels

since March this week, boosted by hot weather in Europe.

Citi upgraded its zinc price forecast for the next three

months on Monday to $3,200 a tonne from $2,800, saying it

expected concern about an economic downturn would weigh on all

base metals prices, but zinc would outperform.

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“We project greater forecast cuts to European zinc smelter

output as winter power shortages play out,” Citi said in a note.

LME aluminum , which is also an energy-intensive

metal, gained 2.1% to $2,439 a tonne.

Aluminum producer Henan Zhongfu Industrial said

it was suspending production this week as China’s Sichuan

province rationed industrial electricity consumption in its most

severe heat wave in 60 years.

In other metals, LME copper edged up 0.2% to $7,992 a tonne,

nickel climbed 1.5% to $22,335, lead added 0.2%

to $2,182 and tin slipped 0.5% to $24,605.

For the top stories in metals and other news, click

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($1 = 6.7953 yuan)

(Reporting by Eric Onstad; Editing by Robert Birsel)



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