Zinc hits 14-year high as Nyrstar cuts output due to power prices

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Zinc prices climbed to their highest level in 14 years on Thursday on supply concerns after producer Nyrstar announced a plan to cut its output due to high power prices in Europe.

The most-traded November zinc contract on the Shanghai Futures Exchange surged as much as 8% to 25,700 yuan ($3,991.86) a tonne, its highest since October 2007.

Three-month zinc on the London Metal Exchange jumped as much as 6.9% to $3,637.50 a tonne, a level unseen since July 2007.

Nyrstar said it would cut production by up to 50% at its three European zinc smelters from Wednesday.

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Electricity prices have reached record highs in recent weeks, driven by power shortages in Asia and Europe, with China’s crisis expected to last through to the end of the year and crimp growth in the world’s second-largest economy.

FUNDAMENTALS

* ShFE lead jumped 3.1% to 15,225 yuan a tonne, copper surged 4.2% to 73,070 yuan a tonne and nickel advanced 1.7% to 146,890 yuan a tonne.

* LME copper rose 2% to $9,843 a tonne, nickel increased 2.3% to $19,360 a tonne, aluminum advanced 0.9% to $3,095 a tonne, and lead was up 1.3% at $2,275 a tonne.

* China’s annual factory gate prices rose more quickly than expected in September, driven by soaring raw material prices, piling pressure on businesses already grappling with energy curbs and supply bottlenecks.

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* China’s economic growth is likely to slow to 5.5% in 2022 from an expected expansion of 8.2% this year, a Reuters poll showed, but the central bank could remain cautious about monetary easing due to worries over high debt and property risks.

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MARKETS NEWS

* Asian stock markets rose, the dollar eased and longer-dated bonds rallied as investors reckoned on inflation bringing forward rate hikes around the world.

DATA/EVENTS (GMT)

1230 US Initial Jobless Clm Weekly ($1 = 6.4381 yuan) (Reporting by Mai Nguyen in Hanoi; Editing by Amy Caren Daniel)