LONDON (Reuters) – Zinc has fared worst in the industrial metals rout. From a 10-year high of $3,484.50 per tonne in February, the price of London Metal Exchange (LME) zinc slumped 30 percent to a mid-July low of $2,474. It is currently treading water around $2,570.
Zinc has been hit by the same global growth jitters as the other LME-traded base metals. The metal, in the form of galvanised steel, is heavily dependent on demand from the automotive and construction sectors, leaving it exposed to both U.S. tariffs and Chinese economic slowdown.
But speculators turned on zinc earlier than any of the other metals and they’ve pushed it harder. Down by 23 percent on the start of the year, it is the laggard in an under-performing LME pack.
Zinc’s previous bull narrative flip-flopped almost as soon as the price started closing in on those decade-highs. Where once the market worried about the lack of new mine supply and physical tightness of refined metal, its focus has switched to the coming wave of new mines incentivised by high prices.
It’s a classic metallic boom and bust story, but one that’s playing in fast-forward mode in the zinc market. Too fast maybe.