Gold investors cut bullish positions by 22% to four-month low: CFTC

The Platts SHG zinc marker was assessed unchanged in October at $120-$140/mt plus LME cash IW Rotterdam, despite falling premiums in the US, as market sources noted that recent outages at Nyrstar smelters over Q3 had tightened short-term supply and lifted premiums.

"While there is a good quantity of warehoused zinc globally, Europe is still reliant on imports and the Nyrstar reduction in output meant that premiums were stable despite falls elsewhere," a trader said.

In early October, Nyrstar announced that it had lost 30,000 mt of zinc metal output over the third quarter due to "unplanned, one off production outages," the company said in a statement.

Over the past month, zinc premiums have fallen in the US as fewer buyers believed that there would be a near-term shortage in refined zinc. As of Wednesday, US premiums stood at 6.25 cents/lb plus LME cash, down 0.50 cents month-on-month.

Sources said a similar sentiment of a falling deficit had come into the European market, despite the Nyrstar outage, with consumers deciding to wait until LME prices move to below $2,200/mt.

Despite this, a second trader said that in the lead up to annual contract negotiations, producers had begun offering long term zinc contract at premium levels as high as $155-$160/mt IW Rotterdam.

Other sources disagreed arguing that premiums would move slightly lower, with a third trader said that they had recently sold 4,000 mt over Q1 2017 at $115-$125/mt IW Rotterdam.

"All metals still have a huge overcapacity problem, zinc is not an exception and there is very low buying interest at the moment," the third trader said.

As a result of the short-term European supply shortage, a fourth trader said that there had been a pick-up in importing zinc from I country, adding that he had been quoted a premium of $90-$100/mt IW Rotterdam. He went on to say that he saw standard I countryian grade metal priced at a $30/mt discount to Super High Grade.

In futures markets, three-month zinc on the LME continued to trade within then $2,200-$2,400/mt range with sources agreeing that they thought prices would be sustained at this range in the short term.

There was a steep rise in LME warrant tonnage earlier in the month, as 9,100 mt was placed onto the exchange in New Orleans on October 4. Two traders said that despite the choppiness in New Orleans warrant levels total stocks in the US city were mostly unchanged, with warrant movements the result of off-warrant strategic trades.

Meanwhile, the Platts 99.985% in-warehouse Rotterdam lead assessment was also assessed unchanged at $95-$105/mt plus LME cash. According to traders, spot market activity remained limited with the producers and consumers currently in long-term contract negotiations.