LONDON (Reuters) – The London zinc market is in the grip of the most protracted and acute squeeze in 30 years. On the London Metal Exchange (LME), the benchmark spread — the difference between the cash price and that for three-month delivery — flexed as wide as $161 per tonne this week before closing on Wednesday at $149.
If you want a historic precedent, you’ll have to go back as far as 1989. A flash squeeze in 1997 saw the cash-to-threes spread hit $263 but it was over in a matter of weeks. Only the rolling tightness of the late 1980s bears any comparison to current market dynamics.
Then, as now, the core issue was low stocks in the LME warehousing system. Inventory was less than 1,000 tonnes at one stage in 1988, although it was a very different market back then. Continue Reading →