Three-month zinc on the London Metal Exchange (LME) gave up early gains to trade sharply lower on Thursday as another broad sell-off in industrial metals took hold.

Shanghai zinc had earlier jumped by the daily limit of 6 per cent to a one-week top following a report that China plans to boost liquidity in the banking sector, and was underpinned by falling inventories and a weaker yuan.

The LME sell-off that followed came as a China foreign ministry spokeswoman described as “shocking” comments from US economic adviser Larry Kudlow that Chinese President Xi Jinping was “holding up” a deal to resolve a trade row between the two countries.

Matt France, head of Asia institutional metal sales at brokerage Marex Spectron, said in a note that dips in metals prices “continue to offer up value on an intra-day basis” but “the bearish trend remains intact’’.

Three-month zinc on the LME rose as much as 2.1 per cent earlier in the session, but was down 3.6 per cent at $2,507.50 a tonne, as of 0739 GMT. In the previous session, the metal had gained 3.5 per cent, its biggest daily jump in almost a year.

The most-traded September zinc contract on the ShFE touched its highest since July 10 before closing up 3.5 per cent at 21,125 yuan ($3,126.99) a tonne for a second straight daily gain.

The People's Bank of China plans to introduce incentives that will boost the liquidity of commercial banks, helping them to expand lending, according to a source with direct knowledge of the matter.

China's zinc output fell 5 per cent year-on-year to 475,000 tonnes in June, the National Bureau of Statistics had said on Wednesday.

Shanghai base metals closed higher across the board, but LME copper was trading down 2.3 per cent, nickel down 2.6 per cent and lead down 2.5 per cent in a broad sell-off.

Three senior executives at Jiangxi Copper Co, one of China's biggest copper producers, have left their roles, the company had said in a stock exchange filing on Wednesday, in a major managerial shake-up at the state-run firm.

Related Topics