Zinc and other industrial metals recovered on Wednesday on bargain hunting and consumer buying, but sentiment was still fragile due to persistent fears about the prospect of trade conflicts hitting economic growth. Tin tumbled to the lowest in nearly six months on concerns about growing supply.
Underlying supply/demand fundamentals were largely healthy in most industrial metals, but prices had been undermined by tit-for-tat trade skirmishes, analysts said. "These losses are purely from financial market fears and it's hard to say when that will bottom. From a fundamental perspective, I don't have any worries at the current time," said Colin Hamilton, director of commodities research at BMO.
Traders said some of the buying was coming from speculators and consumers who regarded the current levels as cheap after steep losses recently. "There will be a lot of focus on the China PMIs coming at the weekend to see how resilient China has remained in the face of the growing trade concerns," Hamilton added, referring to purchasing managers' index reports largely followed by investors to gauge the health of the economy.
Three-month zinc on the London Metal Exchange ended up 1.3 percent to $2,876 a tonne, rebounding from $2,815 on Tuesday, the lowest in over 10 months. The premium of cash zinc over three months zinc above $49 a tonne held near Friday's $59.50, the highest since October last year.
"The fundamental picture is not looking as bullish, with mine ramp ups set to at least push the concentrate market back into surplus," Oliver Nugent, commodities strategist at ING Bank, said in a note. LME aluminium gained 0.8 percent to $2,176 a tonne, after hitting an 11-week low of $2,135 on Tuesday.
"Consumer buying evident into yesterday's lows," Alastair Munro at broker Marex Spectron said in a note. LME copper ended down 0.3 percent at $6,692.5 a tonne, paring losses after earlier in the session dropping to $6,667 a tonne, its lowest since April 4. LME nickel climbed 0.6 percent to $14,880 a tonne, bouncing from an earlier low of $14,505 when Philippine miners sought to lift a ban on new large-scale mining projects after the state removed restrictions on fresh smaller ventures.
Tin was down 1.2 percent at $19,855 a tonne after touching $19,720, the weakest since Dec. 28. Traders said markets were well supplied with material from Indonesia, which reported recently that refined tin exports surged by 79 percent in May. China's manufacturing sector showed slower growth in the second quarter, a private survey showed, as export orders slipped. LME lead gained 1 percent to $2,435.
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