(Bloomberg) — Zinc could see more sharp price swings as growing tightness along the metal’s supply chain leaves buyers exposed to sudden changes in availability. The material used to galvanize steel had a turbulent time on the London Metal Exchange last week, finishing almost 5% higher despite a 2.5% slump on Thursday.
The spike was fueled by the withdrawal of huge volumes from LME warehouses, which stoked speculation of a potential squeeze on short-position holders. The volatile week underscored tight supply conditions that analysts see persisting into next year.
Any production cuts — either by miners or smelters — could provide the catalyst for more short-term price spikes, Shanghai-based analysts at Guotai & Junan Futures Co. wrote in a note. The level at which it’s safe to buy on dips was moving higher, they added.
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