FX.co ★ Zinc Extends Retreat

Zinc prices fell below $3,840 per tonne, extending their retreat from a more than four-year high, pressured by a stronger US dollar and broadly weak sentiment across the base metals complex. Expectations for a Federal Reserve rate hike later this week intensified after US inflation remained elevated in August, bolstering the greenback and making dollar-denominated commodities more expensive for buyers using other currencies.

However, the downside has been contained by tight supply conditions. Production disruptions at several mines, including in China, have heightened concerns over the availability of zinc concentrates, while tensions in the Middle East have disrupted Iranian ore shipments. At the same time, LME inventories remain historically low, and physical zinc availability is particularly constrained outside China. Sharply lower smelter treatment charges, which have turned negative, further highlight the shortage of concentrate available to refiners.