Zinc Surges to Highest Since 2007 as Energy Crisis Deepens

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(Bloomberg) — Zinc spiked to the highest since 2007 in London as the global energy crisis crimped supply from China to Europe and threatened to boost inflationary pressures from rising commodity prices.

Zinc extended gains the day after Nystar — one of the metal’s top global producers– said it will cut output at three European smelters by up to 50% due to surging power prices and costs associated with carbon emissions. Chinese smelters have already been reducing runs as it grapples with an electricity shortage fueled by record coal costs.

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“It is zinc’s turn” to surge as the overseas energy crisis creates large-scale shutdowns or run cuts at smelters, said Jia Zheng, a trader with Shanghai Dongwu Jiuying Investment Management Co. Power curbs are also expanding to China’s main zinc production provinces, she said.

Base metals are extending a year-long rally as the global energy crisis deepens supply cuts from aluminum to zinc. The LMEX Metals Index, which tracks the collective performance of the six main base metals, is on the cusp of setting an all-time high. 

That’s boosting fears around stubborn global inflation. Skyrocketing prices for coal and other energy-intensive products spurred China’s factory-gate prices to their biggest gain since 1995, adding to inflationary threats for the economy. Zinc, used to galvanize steel, is up 31% this year.

Zinc rose as much as 6.7% to $3,637.50 a ton, the highest since July 2007, on the London Metal Exchange. Copper and nickel also rallied.

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Bloomberg.com