Zinc and copper driven up by supply fears before retreating on strong dollar

Zinc on the London Metal Exchange climbed to its loftiest level since May 2022 on Tuesday as supply concerns lifted prices, Business Recorder reported. The benchmark three-month contract rose 1.3 per cent to $3,933 a metric ton by 1020 GMT, after an earlier high of $3,990. Copper also advanced to $14,441.50 a ton, its strongest mark since January 29, before slipping back to $14,218 for a 0.5 per cent decline.

Equity markets fell and bond yields rose on Tuesday after fresh hostilities in the Middle East. A firmer US dollar also raised the cost of dollar-denominated commodities for buyers using other currencies. Available LME zinc stocks that are not earmarked for removal dropped to 68,250 tons, a fall of 28 per cent in under a week and the lowest since December last year.

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said tight supply remained the central theme for industrial metals. Chinese broker Jinrui Futures noted a sharp drop in domestic inventories on Monday, with spot buying focused on deliverable brands. On the Shanghai Futures Exchange, the most-traded zinc contract peaked at 27,165 yuan a ton, its highest since January.