Power crisis reverberating back into metals
Smelter curbs are setting up a shortage of base metals.
Zinc prices rose by as much as 12% today and nearly 20% in a week. Also in London, three-month LME copper jumped to $300, which is the highest since 1997.
Aluminum prices have been surging and that metal is extremely energy intensive. Some of that demand might switch to copper, where possible. Alcoa reported earnings late yesterday and shares are up to $52 from $48.50. Of course, copper is energy intensive in its own right.
I speculated about a possible PBOC rate cut yesterday but that didn't come to pass. It's more a matter of 'when' than 'if' though so stay tuned.
Another copper story is the run on UK warehouses. From Reuters:
LME inventory is much higher at 191,600 tonnes, but a spate of cancellations over the last three weeks means 70% of that metal is now awaiting physical load-out. The remaining live tonnage of 56,850 tonnes is the lowest since early March when the headline figure was itself much lower at 74,000 tonnes.
The nature of these cancellations - a near clockwork 10,000 tonnes per day since the start of the month - has raised eyebrows in the London market.
US copper is on a nice three-day run:
