Shanghai zinc prices rallied to their highest since July 2007 on Wednesday on worries over supply shortages in top consumer China.
The most-traded May zinc contract on the Shanghai Futures Exchange聽rose as much as 5.4% to 28,995 yuan a tonne ($4,554.16), before settling up 3.2% at 28,395 yuan ($4,459.92).
Benchmark zinc聽on the London Metal Exchange hit $4,521.50, the highest since March 8. Prices of the metal, used to galvanize steel, hit a record high of $4,896 a tonne last month.
颁濒颈肠办听here聽for an interactive zinc price chart.
鈥淶inc inventories have drawn down sharply and the situation is worsening for European smelters to keep their margins positive amid fears of another power crisis,鈥� said ANZ analyst Soni Kumari.
鈥淭he market sentiment for industrial metals was boosted by easing of transportation bottlenecks in China 鈥� further boost came from increasing economic support.鈥�
Market analyst聽Fitch Solutions Country Risk & Industry Research聽has recently revised its 2022 zinc price forecast higher by more than 20% to $3,500 per tonne.
In a report,聽Fitch聽argues that metal prices are being bolstered by the energy crisis stemming from the ongoing Russian invasion of Ukraine that has led to many smelters halting or reducing zinc metal production.
Inventories
Concerns over spot supply have been growing in the zinc market this month, with a sharp rise in orders to withdraw stocks from LME warehouses helping to lift prices toward a record high.
Zinc stocks in LME-registered warehouses聽are at 120,825 tonnes, their lowest since June 2020 and down more than 40% since December.
China鈥檚 refined zinc output fell on both an annual and monthly basis in March as the covid-19 outbreak disrupted transportation of raw materials, state-backed research house Antaike said.
The nickel聽price jumped 4.9% to 215,060 yuan ($33,778.88) a tonne, after rising to its highest since March 31 earlier in the session.
(With files from Reuters and Bloomberg)