09.07.201400:54:00UTC+00Zinc prices near 3 year high

A boom in the automobile industry that has put added strain on a limited supply has pushed zinc to its highest value in 35 months.

Futures for zinc in August gained another 0.8% late afternoon on the London Metal Exchange (LME) today leading to a price per metric ton of $2,282. Prices have gone up by 21% in the last twelve months and had earlier reached a high of $2,385.50, a level last seen on August 5, 2011.

Furthering the metal’s gains are the diminishing stockpiles in warehouses tracked by the LME. Zinc levels have dropped by 29% so far this year to end up with the lowest quantity in three and a half years.

Partly responsible for the faster pace in consumption is the increased demand from the world’s two largest economies. Automobile sales in China climbed up by 14% in June while the US was met with greater demand for new vehicles in both May and June. The car industry is a major user of zinc as it is used for coating medium gauge steel sheets for its body panels.

Patricia Mohr from the Scotiabank Group credits the rise in demand to the improving state of the US’ industrial production as seen in auto manufacturing. Financial services provider Morgan Stanley says that a further escalation in the supply deficit can be expected due to the strength of the global automobile industry.

Copper rose as well to a price per metric ton of $7,130 showing a 0.1% gain after achieving its best in nearly five months of $7,212. During the past twelve months, futures for the metal on New York’s Comex have increased by 5.1%.