Zinc’s outright price on the LME was recently trading at $2,481.50 per tonne on Tuesday morning, gaining further ground on Monday’s closing price of $2,445 per tonne, while turnover was moderate at just under 2,000 lots exchanged as of 10am London time.
Supporting the uptick, overnight news that a conversation was held between US trade representative Robert Lighthizer, US treasury secretary Steven Mnuchin and Chinese vice premier Liu He gave markets a further boost amid hopes of the two countries implementing a phase one trade deal.
Meanwhile, upward price action in LME zinc was also supported by a fresh withdrawal of some 1,200 tonnes out of LME-registered warehouses in New Orleans, while some 500 tonnes of zinc was delivered into sheds in Rotterdam.
But total LME zinc stocks remain elevated at some 224,300 tonnes, with a total of 215,475 tonnes on-warrant, while the galvanizing metal’s forward curve continues to trade in contango. LME zinc’s benchmark cash/three-month spread was recently trading at a contango of $25.50 per tonne.
“Smaller clients are being squeezed out of the market either by the insane price volatility, or in some cases ridiculous brokerage income targets set by their brokers. And if the physical market is quiet so will the physical trade clients be,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.
“Aside from this, there is a near perfect storm of algorithms seemingly running the market and doing the same thing in brokers risk management systems seemingly cutting out human influences,” he added.
Elsewhere in the complex, the three-month copper price was slightly subdued over the morning, recently trading at $6,498.50 per tonne and dipping below nearby support levels. Turnover was thin at just under 3,000 lots exchanged as of 10.15am London time.
Deterring forward business over the morning, LME copper’s forward curve remains in a sizeable backwardation, with the metal’s cash/three-month spread recently trading at a backwardation of $17.75 per tonne.
Still, exchange stocks for LME copper continue their decline, after a net total of 2,375 tonnes was removed out of LME-registered warehouses in Rotterdam and New Orleans, against a 1,000-tonne inflow delivered into Bilbao sheds.
Total LME on-warrant copper stocks now stand at 54,525 tonnes.