FX.co ★ Zinc Rises Toward 3-Year High

Zinc futures in the UK have climbed to $3,220 per tonne, nearing the three-year peak of $3,250 observed on January 6th. This increase is in line with the upward trajectory for base metals driven by supply concerns. Despite a 6.3% increase in mined zinc output, refined zinc production was anticipated to decline by 2% last year. This is largely due to production restrictions faced by smelters in Kazakhstan and Japan, the latter of which has been impacted by the closure of the significant Toho Zinc Annaka plant. Concurrently, treatment charges for zinc approached $100 per ton, a notable shift from the negative $115 recorded at the end of the previous year, as indicated by private surveys. As a result, London Metal Exchange (LME) stocks plummeted to 100 thousand tonnes, a significant drop from the 230.5 thousand tonnes at the beginning of last year. This followed the near exhaustion of both on-and off-warrant stocks at the commencement of the fourth quarter. The prospects for base metals remain favorable, bolstered by expectations that increased electrification and data center investments will uphold the demand for industrial inputs despite potential challenges to global economic growth.