Zinc Climbs on Dwindling Stockpiles, China Stimulus Speculation

Jul 10, 2014 3:34 am ET

July 10 (Bloomberg) -- Zinc advanced for the third time this week as inventories shrank amid speculation that weaker- than-expected Chinese trade data will drive the government to add more stimulus to support growth.

The contract for delivery in three months on the London Metal Exchange gained 0.4 percent to $2,290.75 a metric ton at 4:24 p.m. in Tokyo after declining as much as 0.8 percent earlier. The metal touched $2,318.50 on July 8, the highest since August 2011.

China’s trade surplus contracted to $31.6 billion in June, with exports and imports both rising less than forecast, government data showed today. China’s central bank will refrain from choking the supply of cash in the third quarter to lower financing costs and help an economy projected to expand at the slowest pace in 24 years, according to a Bloomberg survey.

“With today’s weaker-than-expected trade data, investors expect China to add more moderate stimulus to meet its growth target this year,” said Tetsu Emori, a fund manager at Astmax Asset Management Inc. in Tokyo.

LME stockpiles for zinc have fallen 29 percent this year to 662,525 tons, the lowest level since December 2010. Global demand will exceed supply by 290,000 tons in 2014 and by 300,000 tons in 2015, according to Morgan Stanley.

Copper in London was little changed at $7,125.50 a ton. In New York, futures for September delivery rose 0.1 percent to $3.2515 a pound on the Comex, while the contract for the same month declined 0.7 percent to close at 50,570 yuan ($8,159) a ton on the Shanghai Futures Exchange.

China’s imports of unwrought copper and copper products fell to about 350,000 tons in June, a 7.9 percent decline from the previous month.

In London, nickel slid after LME stockpiles jumped to a record. Aluminum and lead were little changed, while tin dropped.