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The LME base metals complex was largely weighed down by the dollar, which has maintained an upward trajectory since the latter stages of last week. The US currency touched a high of 95.22 on Monday morning and remains well away from its recent low of 93.81 reached on September 21.
The combination of a firmer dollar and holidays in China has limited trade activity this morning and kept prices under pressure.
Despite a 3.2% week-on-week drop in LME stocks last week, the three-month zinc price showed the most weakness with a decline 0.7%, falling to $2,595 per tonne as at 9.02am Shanghai time from last Friday’s close of $2,062 per tonne.
Supply cuts in China have created a structural tightness for this zinc in the short term, according to Fastmarkets MB analyst James Moore, but Vedanta Resources’ Gamsberg mine project and the resumption of operations in Century mine in Australia are expected to increase supply flow.
“Rising supplies will lead the market to gradually rebalance,” Moore said, adding that Fastmarkets MBR projects the refined zinc market to record a 13,000-tonne surplus in 2019 from a 215,000-tonne deficit in 2018.
The three-month aluminium followed zinc’s lead, falling almost 0.4% to $2,054 per tonne compared with last Friday’s close.
Bearish factors have emerged to pull the price of aluminium lower, primarily the United States’ decision last week to extend the deadline for companies to wind down operations and contracts with Russian light metal producer UC Rusal from October 23 to November 12, and a resolution last Friday to end the nearly two-month strike at Alcoa’s Western Australian alumina operations.
The other LME base metals registered minimal falls, with the three-month nickel and copper prices both down by 0.3%, while lead dipped by 0.1%. Tin was untraded so far this morning.
The Shanghai Futures Exchange is closed due to the Golden Week holiday, to mark China’s National Day. The exchange will reopen on October 8. Base metal prices down
Currency moves and data releases