Zinc – The best performing metal in the world just hit a new peak.

LONDON — Zinc prices climbed on Monday to a fourth successive 10-month peak on persistent concern about declining supplies while copper rose to the highest in four weeks after the dollar slid.

Three month zinc on the London Metal Exchange had gained 1.4 per cent to US$2,019.50 a tonne by 1054 GMT, the strongest since July 22 last year, after a rise of 0.5 per cent on Friday.

Zinc is by far the best performing LME metal this year, rallying 25 per cent on forecasts that tightening supplies will cause shortages.

LME warehouse inventories have slid 24 per cent since mid-February to 379,875 tonnes, the lowest since July 2009.

“I think there’s still plenty of upside, it just depends on how quickly it gets there. Every technical indicator says buy zinc, or certainly don’t be short or you’ll get into trouble,” Bielski added.

But high prices are weighing on physical zinc demand in China, where premiums have dropped to US$115 for bonded material from US$135 in late May.

LME copper advanced by 0.5 per cent to US$4,714 a tonne, having earlier touched US$4,748 which was the strongest since May 12. Prices rose 1.7 per cent on Friday.

Metals markets were bolstered after the dollar slid on Friday to the lowest in more than three weeks after a weak jobs report on Friday pushed back expectations for a rate rise this month.

The dollar index edged up on Monday, but only recouped a fraction of its losses from Friday. A weak dollar helps commodities by making them cheaper for buyers outside the United States.

A speech by Federal Reserve chief Janet Yellen on Monday evening will be watched very closely.

“In the absence of cutbacks (partly because most miners are still profitable) and questions about ‘real’ Chinese demand, we think (copper) prices will likely remain range-bound over the course of June and see a US$4,500-US$4,850 band in place,” said broker INTL FC Stone.

A flurry of data from China in the coming weeks is expected to reinforce views that the world’s second-largest economy is slowly steadying but not gaining momentum, a Reuters’ poll showed.

LME tin rose 1.2 per cent to US$16,800 a tonne after tin shipments from top exporter Indonesia slipped in May by 22 per cent from the previous month, according to a trade ministry official.

Source – Financial Post