Zinc prices touched the highest in over a month on Wednesday on concerns about supply after reports of a fire at a Russian mine project and after recent mine suspensions.
Three-month zinc on the London Metal Exchange had gained 1.7% to $2,612 per metric ton by 1215 GMT, the strongest since Oct. 2.
Russian news agency Interfax said a fire had been extinguished at a workshop at Ozernoye, which is developing a large zinc-lead mine in the eastern republic of Buryatia.
Morgan Stanley said in a note earlier this month that the start-up of Ozernoye, expected to produce 350,000 tons a year, had already been delayed until early next year.
“This is potentially a very bullish development for the zinc market, as it (Ozernoye) is scheduled to become one of the largest zinc mines in the world,” said Dan Smith, head of research at Amalgamated Metal Trading.
“There’s already been a lot of talk about mine closures and how close the price is to the cost floor.”
Nyrstar said last week it planned to temporarily close two US zinc mines at the end of November due to weak prices and the impact of inflation, a third shutdown of zinc operations by producers in recent months.
Adding to supply concerns, LME zinc inventories have more than halved since early September.
Other LME metals were little moved, with a firm dollar index weighing on the market, making it more expensive for those buying commodities in other currencies.
The dollar’s rebound extended for a third day on Wednesday after some Federal Reserve policymakers left open the possibility of further rate hikes.
In China’s spot market, the copper premium rallied on low stocks, standing at 335 yuan a ton on Tuesday, close to a two-month high touched in late October.
October refined copper production in the country was below expectations. The Shanghai Metals Market assessed it at 993,800 ton, down 1.8% from the prior month.
LME copper edged down 0.1% to $8,179 a ton, aluminum was unchanged at $2,265, nickel dipped 0.3% to $17,865, lead added 0.3% to $2,195 and tin rose 0.4% to $24,650.
(By Eric Onstad, Julian Luk, Polina Devitt and Siyi Liu; Editing by Barbara Lewis)
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