FX.co ★ Zinc Retreats as China Cracks Down on HFT

Zinc futures experienced a 1% drop, settling at approximately $3,280 per tonne on January 16. This decline followed a near three-year high that was achieved on January 15. The downturn was influenced by actions taken by Chinese regulators to curb high-frequency trading practices. Specifically, Chinese authorities directed key exchanges, notably the Shanghai Futures Exchange—the country's primary metal trading platform—to eliminate high-frequency trading servers from their data centers. This regulatory intervention impacted the broader metals market, causing a drop in zinc prices both in Shanghai and on the London Metal Exchange (LME). Earlier in the week, zinc prices had been buoyed by significant investor interest in tangible assets, persistent concerns about supply constraints, and the anticipation that initiatives towards electrification and data center expansion would continue to drive industrial demand even amid global economic challenges. This latest regulatory measure disrupted the upward momentum, underscoring how policy decisions can trigger short-term fluctuations in market dynamics.