(Bloomberg) -- Zinc touched the highest in five years as the London Metal Exchange's annual LME Week began with investors betting that a rebound in demand from China will underpin prices. Mining stocks also climbed.
Metals are extending their advance after China's economy stabilized in the third quarter, expanding 6.7 percent from a year earlier, to bolster the outlook for commodities demand. Zinc prices have gained 53 percent this year amid a growing supply shortage.
“The strong zinc fundamentals remain unchanged in the past weeks,” Richard Fu, the head of Asia & Pacific at Amalgamated Metal Trading Ltd. in London, said in an e-mail. “The general macro economic figures in China recently are not bad.”
Zinc for delivery in three months rose 2.6 percent to settle at $2,458 a metric ton at 5:50 p.m. on the LME, after touching $2,479.50, the highest since August 2011.
Separately, local coal prices have spiked amid a supply crunch, boosting costs for metals production.
“Coal accounts for a big portion of aluminum production costs,” Jia Zheng, a trader at Shanghai Minghong Investment Management Co., said by phone from Shanghai, “The rally in metals may continue if coal holds on to its gains -- investors who play macro or energy cards remain bullish.”
In other metals:
- The Bloomberg Americas Mining Index rose 1.7 percent, helped by gains in Detour Gold Corp. and Yamana Gold Inc.
- Aluminum, copper, nickel and tin also climbed on the LME. Lead was unchanged.
- Copper futures for December delivery increased 0.5 percent to $2.205 a pound on the Comex in New York.
- Copper may drop as recent gains are probably unsustainable, Barclays Plc said in an e-mailed note. The bank cited weak demand in emerging markets outside China and signs of ample supplies even as exchange stockpiles drop.
--With assistance from Winnie Zhu To contact the reporters on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net, Joe Deaux in New York at jdeaux@bloomberg.net. To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Joe Richter
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