Market Watch: Zinc Hits 3-Week High on LME Amid Supply Disruptions

Zinc prices in London have surged to a three-week high, driven by expectations of an upcoming rise due to supply disruptions and a takeover dispute at a major smelting facility. On the London Metal Exchange (LME), three-month zinc rose by 1.8% to $3,199 per ton, reaching its highest level since October 3. The contract was trading up 1.7% at 06:52 GMT. Meanwhile, on the Shanghai Futures Exchange (SHFE), the November zinc contract increased 1.6% to 25,455 yuan per ton ($3,578.66).

The LME cash contract for zinc showed a $58.25 per ton premium over the three-month contract yesterday, the highest since September 2022, indicating a nearby supply squeeze. Speculators are increasing their positions in LME zinc futures and options amid expectations that the technical squeeze could lead to a rally in the coming weeks. Analysts highlighted that the zinc market has been shaken by a series of mine disruptions this year, significantly tightening the supply of zinc ore and concentrate.

Primary company Sibanye Stillwater announced on Friday that operations at Australia's Century Zinc have been suspended until mid-November. A trader noted that sentiment towards Korea Zinc, whose shares surged 29.9% to a record high amid a takeover battle, is also supporting the zinc price.

Elsewhere on the LME, aluminum rose 0.7% to $2,688 per ton, touching a three-week high, while SHFE aluminum climbed to 21,170 yuan, the highest since October 14. Prices are finding support from tightness in the supply of raw materials alumina and bauxite. Copper on the LME increased by 0.6% to $9,576 per ton, tin rose 1.1% to $31,250, while nickel and lead fell by 0.2% to $16,275 per ton and $2,059 per ton, respectively.