Zinc falls as increase in Chinese stocks heralds surplus

According to Mining News Pro - Trading activity was low with the LME closed on Wednesday and Thursday for the Christmas holiday. Investors in China, the biggest metals consumer, began to take short positions in zinc after industry data provider SMM published data showing an increase in zinc stocks held there, a Beijing-based trader said. The global refined zinc market will move to a small surplus next year after several years of deficit, said BMO analyst Colin Hamilton. "There should be a build in visible inventories," he said, predicting prices would average $2,249 in 2020.

STOCKS: Data provider SMM said zinc ingot inventories in Chinese warehouses rose by 5,400 from Friday to 118,700 tonnes on Monday. However, stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE) at 32,641 tonnes are the lowest in nearly a year and inventories in LME-registered warehouses at 51,900 are near decade lows. POSITIONING: The 20 biggest speculative investors on the Shanghai exchange raised their short position in February zinc by 1,115 lots to 71,314 lots on Tuesday while building their long position by 261 lots to 58,293 lots.

TC/RCs: Treatment charges for zinc concentrate in China rose to $310 a tonne this month, the highest since June 2008, incentivising smelters to raise output. CHINA: China said this week that to support its economy it would step up support for employment and study measures to lower financing costs for smaller companies, including cuts in the reserve requirement ratio (RRR), relending and rediscounting. TRADE: Beijing also on Monday said it would remove import tariffs on a range of goods next year. ALUMINIUM: Cancellation of 270,525 tonnes of LME aluminium warrants -- a precursor to delivery of the metal out of warehouses -- lowered on-warrant inventories in the LME system to 928,050 tonnes, reversing a recent buildup. Aluminium stocks in ShFE-registered warehouses at 193,820 tonnes are down from more than 700,000 tonnes in March and the lowest since early 2017. Benchmark LME aluminium finished up 0.6% at $1,814 a tonne after touching its highest since Nov. 8. OTHER METALS: LME copper did not trade in closing rings but was bid up 0.4% at $6,213 a tonne, nickel traded down 0.1% at $14,340, lead rose 1.6% to $1,947 and tin fell 1% to $17,125.