- The benchmark zinc price on the London Metal Exchange (LME) surged significantly due to supply-side disruptions, reaching a nearly four-year high of $3,633.50 per ton. The shutdown of Nexa Resources' (NEXA:US) largest zinc smelter in Latin America exacerbated concerns about structural shortages in the spot market.
- Global copper prices, after rising for eight consecutive trading days, experienced a technical correction, falling 0.9% to $13,971 per ton. There were signs of profit-taking as prices approached historical highs.
- The internal trends of industrial metals showed significant divergence. Aluminum prices remained volatile at high levels, driven by large withdrawal orders at Malaysia's Port Klang, while tin and nickel prices recorded daily declines of 2.5% and 1.6%, respectively.
Frequent supply-side disruptions are reshaping pricing models. The global base metals market's pricing center is structurally shifting upward due to frequent supply interruptions. According to the latest information, Nexa Resources' (NEXA:US) Cajamarquilla zinc smelter in Peru was forced to suspend operations due to fire damage. This facility has an annual capacity of 344,400 tons and holds a central position in the Latin American supply chain. Broker Marex noted in a research report that, combined with the previous explosion at Kazzinc, market participants are being forced to reassess the supply elasticity of the zinc market. Continuous force majeure events have disrupted the previously assumed balance of supply and demand, forcing quantitative funds and spot traders to rebuild long positions on the forward curve.
London Metal Exchange inventory alert. Supply disruptions have directly amplified the fragility of the existing inventory system. The latest data shows that zinc inventories in registered warehouses of the London Metal Exchange (LME) have fallen to 110,875 tons. At the current global consumption rate, this inventory level can meet less than three days of terminal demand. The International Lead and Zinc Study Group (ILZSG) had previously predicted a supply gap of 19,000 tons in the refined zinc market this year, and the shutdown of the Cajamarquilla smelter will undoubtedly further widen this gap. Extremely low inventory levels limit the spot market's ability to stabilize price fluctuations, making any marginal supply reduction capable of triggering sharp price pulses.
Copper prices undergo a technical correction at high levels. While zinc prices soared, copper prices, as a barometer of the macroeconomy, experienced a temporary respite. Previously, benchmark copper prices had reached $14,196.50, approaching the historical high of $14,527.50 set in late January. The eight-day consecutive rise accumulated significant profit positions, and institutional investors chose to reduce some risk exposure near previous high resistance levels. Analysts pointed out that the short-term correction in copper prices is more of a spontaneous liquidity adjustment rather than a reversal of long-term fundamental logic. The global energy transition, driven by grid upgrades and demand for new energy vehicles, continues to provide bottom support for copper's long-term valuation.
Divergence in the forward fundamentals of industrial metals. The trading day on the London Metal Exchange (LME) revealed the complexity of current macro trading logic. Aluminum prices (ALI1!) remained steady around $3,651.50, supported by spot demand from a 10,000-ton withdrawal order at Port Klang warehouses. In contrast, tin prices (FTIN1!) and nickel prices (NICKEL1!), which are more closely related to the consumer electronics and stainless steel supply chains, showed weakness. This divergence in trends among different metals indicates that in an environment of overall tightening macro liquidity, funds are more inclined towards commodities with immediate supply contraction logic or rapid visible inventory depletion. The commodity market is shifting from a broad beta trend to an alpha game based on micro fundamentals.
