BLBG: Zinc Rises Most in 2 Weeks in London as China Builds Stockpiles
Zinc climbed the most in two weeks on the London Metal Exchange after China’s stockpiling agency bought metal from domestic smelters, reducing supply.
The State Reserve Bureau bought 100,000 metric tons, taking purchases this year to 159,000 tons, according to four people familiar with the transactions who declined to be identified. Purchases will total 300,000 tons, one said. Zinc has dropped 55 percent in the past year as the International Lead and Zinc Study Group said supply exceeded demand by 195,000 tons in 2008.
“The government is using relatively low prices to purchase metal they will need during the next few years,” said Michael Widmer, an analyst at BNP Paribas SA in London. “They’re trying to help some of the smelters to survive.”
Zinc for delivery in three months jumped as much as $27, or 2.4 percent, to $1,138 a ton on the London Metal Exchange, the biggest intraday gain since Feb. 9. The contract was at $1,120.50 a ton by 9:38 a.m. local time.
The purchases “should benefit the market overall,” said Jan Altink, spokesman in London for Nyrstar NV, the largest zinc producer. They “mop up excess supplies.” Mining and smelter cutbacks have probably put the supply of zinc concentrate, used to make the metal, “roughly” into balance with demand this year, from a surplus last year, Widmer said.
China plans to remove 800,000 tons of aluminum capacity, 300,000 tons of copper capacity and 400,000 tons of zinc capacity, as part of a stimulus package, the China Securities Journal said, citing people it didn’t identify. The government may also start to buy nickel to increase state reserves, the report said. The State Reserve Bureau has also bought aluminum and copper this year, according to Macquarie Group Ltd.
Canceled Warrants
Copper advanced $55 to $3,340 a ton. The amount of copper scheduled to be taken out of LME-monitored warehouses, known as canceled warrants, jumped to 30,375 tons, or 5.5 percent of inventories, from 3.3 percent yesterday.
Gains in equities in Europe and Asia helped “sentiment” in metals, Widmer said. The U.K.’s FTSE 100 Index jumped 1.4 percent and the Nikkei 225 in Tokyo climbed 2.7 percent.
Aluminum rose $4.25, or 0.3 percent, to $1,333.25 a ton, and tin jumped $275, or 2.6 percent, to $10,800 a ton. Nickel dropped $19, or 0.2 percent, to $9,781 a ton.
