Prices of zinc jumped 8% in afternoon trades Friday on
supply concerns after Glencore announced to cut production of the metal and
after the dollar weakened against other currencies
Prices of zinc and lead were supported on supply worries after Glencore,
the world's biggest metal producer, announced production cuts. Glencore will
cut nearly 0.5 million tons of zinc production which nearly amounts to 3.5% of
global output.
Lead production by Glencore will also be cut by nearly 0.1 million tons. Prices
of industrial metals were also be supported by lower stockpiles of metal on
London Metal Exchange (LME), indicating tight supply situation. Copper
inventories slipped by 250 tons to 305,225 tons, aluminium stockpiles dropped
by 7,900 tons to 3.13 million tons, lead inventories fell by 700 tons to
156,575 tons, zinc stockpiles slumped by 575 tons to 587,350 tons and nickel
inventories by 2,100 tons to 441,492 tons, LME data showed Friday.
Prices of red metal were also be supported after
Chile's Collahuasi mine, the world's largest producer, said last week that it
will reduce production by 30,000 metric tons a year in response to low prices.
The mine accounted for 6% of global production in 2014.
Red metal prices will also supported after
International Copper Study Group (ICSG) said the copper market will have small
deficit of around 130,000 tons in 2016, compared with a prior estimate of a
230,000 tons surplus.
Nickel prices were also supported as global demand
for nickel is expected to increase to 1.96 million tons in 2016 compared to
1.90 million in 2015, as per the INSG.
At the same time, global output of nickel is
expected to shrink to 1.94 million tons in 2016 compared to 1.95 million tons
in 2015.
Prices of base metals were also supported by weak
dollar against other currencies following dovish FOMC minutes.
The weak dollar against other currencies boosted
investors' appetite for dollar-denominated commodities.
