Metals Market Update: Zinc Stocks Rise, Iron Ore Pressured by Production Cuts and Property Market Woes"

Metals: LME zinc on-warrant stocks rise

The latest LME data shows that total on-warrant stocks for zinc continued to see large inflows, rising by 37,425 tonnes (biggest daily addition since January 2021) yesterday to 130,950 tonnes. The majority of these inflows occurred in Singapore warehouses. Total readily available stocks for zinc have witnessed net inflows of 54,550 tonnes in the last two days alone, whilst net inflows for the month total 66,425 tonnes. The stock build has seen the cash/3m spread coming under some pressure, falling from a backwardation of US$36.50/t last week to a contango of US$4.25/t yesterday.

Iron ore remains under pressure in ferrous metals as steel mills in China extend production cuts, while the struggling Chinese property market has further dampened the raw material demand outlook. Mysteel reports that steel plants in Jiangsu province in China have started to reduce steel production by between 20%-30% for the latter half of the year. Steel mills in other provinces, including Shandong, have also started trimming their output levels as a result of production controls. Falling home prices in July further highlight the deepening property crisis in China.