Zinc is trading at its highest price in more than a year amid diminishing supplies of the metal.
Zinc for delivery in three months rose $24, or 1.1%, to $2,177 a metric ton Friday on the London Metal Exchange, the highest level since Feb. 14, 2013. Zinc prices gained 4.3% for the week.
The metal is primarily used to galvanize steel to make rust-resistant products. Zinc supplies are dwindling as construction demand is ramping up globally while mines shut down.
The amount of zinc held in the LME’s global warehouse network fell to a 3½-year low of 674,375 metric tons on Thursday. While the stockpiles increased by 1,900 tons on Friday, the amount of zinc in LME storage is still down 28% this year.
“That decline in stocks is helping to drive zinc higher, no question about it,” said Michael Turek, senior director of metals with Newedge in New York. “In the meantime, demand is quite good in the U.S., and Europe isn’t the basket case we expected it to be.”
Global demand for zinc is likely to grow 5.7% this year to 13.85 million metric tons and expand a further 5.2% in 2015, according to Morgan Stanley analysts.