FX.co ★ Zinc Drops Amid Trade Tensions and Growing Chinese Supply

As of mid-October, UK zinc futures have declined to below $2,940 per tonne, marking their lowest point since September 26. This downturn is primarily due to escalating US-China trade tensions and the anticipation of increased production. China has initiated special port charges on vessels associated with the US, a retaliatory measure in response to former President Trump's threat of imposing 100% tariffs on Chinese imports, coupled with China's tightening control over rare earth exports. Concurrently, Chinese zinc producers, who hold the position of the largest global producers, are poised to export metal, capitalizing on the more favorable prices in international markets. Concerns surrounding a potential global oversupply are also contributing to the price pressure. According to the International Lead and Zinc Study Group, the global supply of refined lead is projected to surpass demand by 91,000 tonnes in 2025, with an anticipated surplus reaching 102,000 tonnes in 2026. Nonetheless, a steep decline in inventories might mitigate some losses; stocks of zinc in the London Metal Exchange have significantly decreased from 230,000 tonnes in January to just 40,850 tonnes by October.