Zinc tanks on global supply glut, high LME stocks

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Source: Dukascopy Bank SA
Industrial metals apart from nickel were bearish on Friday amid profit-taking and China's inflation reading. China's inflation rose more-than-expected last month, weighing on the country's stimulus hopes. Weak data from the US as well as elevated LME inventories put additional pressure on base metals.

Aluminum declined as investors sold the metal to take profits after a recent increase in prices. Meanwhile, bloated LME stocks that remain near a record high of 5.24 million tonnes continued to push the light metal down.

Copper declined amid profit-taking and fading hopes for easing measures in China. Moreover, high LME stockpiles coupled with negative US trade data added to losses of the red metal.

Nickel was the only gainer on US Dollar weakness. However, gains were limited amid bloated LME inventories and persistent surplus on the physical market.

Zinc plunged on high LME stocks and oversupply on the physical market. The metal may be further pressured by on-going index funds' rebalancing that are likely to cut zinc weighting amid weak fundamentals.


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