LONDON (Reuters) – A bucket of cold water has just been poured on zinc’s bull fires. The London zinc price has been on a two-year romp, hitting a 10-year high of $3,595.50 a tonne last month.
The bull run has been fuelled by a narrative of tightness, first at the raw materials stage of the supply chain and more recently in the refined metal segment of the market.
That narrative, however, has just been upended by the delivery of 78,950 tonnes of metal onto warrant at the London Metal Exchange (LME). The “arrivals” showed up in today’s LME stocks report and break a long-running downtrend in LME stocks.
Headline inventory has bounced back to the levels of early December. Someone, it seems, is calling time on the zinc party. Today’s was the largest single-day “arrivals” event in LME zinc stocks since July 2013.
It’s worth remembering that when this scale of tonnage shows up in the LME’s daily stocks reports, the metal hasn’t all just miraculously arrived and been warehoused overnight.
It has probably been accumulating for a while, biding its time until the owner hits a keyboard button to deliver it onto LME warrant, at which stage it “arrives” in the LME warehouse network.