(AMM) Zinc rallies as funds cover shorts

Zinc prices are expected to continue to rebound in the near term after approaching $2,100 per tonne in recent days as hedge funds cover short positions, offsetting the arrival of more than 17,000 tonnes of metal in London Metal Exchange-bonded warehouses in New Orleans.

A drop any lower and the galvanizing metal would have returned to summer 2010 levels and close to the cost of production, market participants said.

That stall ultimately prevented prices slipping to $2,000 per tonne, market participants said. Galvanizers have told AMM they would buy in quantity if prices fell back to $1,800 to $2,000 per tonne.

Such a decline is unlikely for now, traders predict, although prices are equally unlikely to return to the heady heights of $3,800 per tonne reached in early summer 2007.

For now, the funds are happy to...

Published

May 19, 2011

02:15 GMT

New York