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Zinc climbed to its highest in two weeks on Wednesday on persistent concern about shortages and after Chinese steel futures rallied. Benchmark zinc on the LME closed up 1.2 percent at $3,228 a tonne, after touching $3,240.50, its highest since Nov. 7. Prices have also broken above shorter-dated moving averages, sending a buy signal to trend-following funds. Zinc, mainly used for galvanizing steel, got support after Chinese steel futures rallied for a third straight session.
Sentiment on zinc was also bullish at the China Lead and Zinc Week gathering in Shenzhen. The global zinc market deficit widened to 39,800 tonnes in September from a revised deficit of 38,700 tonnes in August, data showed. Robin Bhar, head of metals research at Societe Generale, said “The zinc market is tight, with treatment charges (TCs) at low levels, an indication that concentrate supplies are thin. I still think prices need to stay at this level to get more supply. Spot TCs are still low, they haven’t picked up, so there’s a need to incentivise more supply.” He added “The broader market had found support after a correction in recent weeks when lower prices sparked buying by industrial consumers. But I‘m not getting carried away, I don’t think we’re going straight back up to the highs again, but we’re at a new equilibrium after all that euphoria during LME Week.”