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The most-traded May zinc contract on the SHFE stood at 22,610 yuan ($3,363) per tonne as at 10.18am Shanghai time, down by 0.9% or 205 yuan per tonne compared with Tuesday’s close of 22,915 yuan per tonne.
An uptick in risk aversion among investors, driven by comments from the head of the International Monetary Fund (IMF) that global economic growth may slow further than previously expected this year and the next, has seen the majority of SHFE base metals prices weaken this morning.
In a speech in Washington on Tuesday, Christine Lagarde said that rising trade tensions, concerns over Britain’s exit from the European Union and tougher financial conditions as central banks raised interest rates had “increasingly unsettled” the world economy over recent months.
The IMF had said in January that it expected the world economy would grow by around 3.5% in 2019 and 3.6% in 2020, 0.2 and 0.1 percentage points below last October’s projections.
But Lagarde said that the global economy “has since lost further momentum, as you will see from our updated forecast next week”.
“The latest negative commentary for global growth from the International Monetary Fund has cast a shadow on the metals markets,” a Shanghai-based analyst said.
In zinc, prices were further pressured by signs of a softening concentrate market due to increased mine supply.
“Zinc led the metals lower on signs of a softening concentrate market. Korea Zinc and Teck Resources have reportedly reached agreement on treatment charges at USD254/t. This is up from USD147/t last year and would be at highest level since 2015, reflecting increasing mine supply,” David Plank, head of Australian economics at Australia and New Zealand Banking Group (ANZ), said in a morning note. Other highlights – The dollar index, at 97.20 as at 11.11am Shanghai time, remains in relatively high ground but is down from the three-week high of 97.52 reached on Tuesday. – US carmaker General Motors reported that sales in the first quarter of 2019 were down by 7% year on year. – In US data on Wednesday, the ADP non-farm employment change is due.