London, Oct 15 (AFP/APP):A key index tracking the prices of industrial metals including aluminium, copper and zinc, has struck record heights as soaring energy prices reduces their production.
The London Metal Exchange Index on Thursday reached an all-time peak at 4,623.4 points.
It represents a 35-percent jump for the LME index since the start of the year, while the increase is more than double from March 2020 when the coronavirus pandemic took hold worldwide.
“Rising oil and gas prices are once again putting pressure on energy intensive industries, forcing them to cut production in the face of spiralling costs and creating supply shortages,” noted Michael Hewson, chief market analyst at traders CMC Markets UK.
Europe’s benchmark gas price has more than tripled in just a few months, while oil futures have surged by about one-third since late August as economies reopen after pandemic lockdowns.
Electricity costs have also rocketed, causing Nyrstar — a Belgian producer of zinc and other base metals — to cut production at its three European smelters this week by up to 50 percent, citing “the surge in energy prices”.
Zinc’s value has increased by one quarter this week alone to reach a 14-year high at $3,944 a tonne.
Used to galvanise other metals, zinc rallied also on a cut in Chinese production, according to analysts, who point additionally to a drop in LME stockpiles of the metal over the past six months and which shows no sign of ending.
Soaring also is the price of aluminium, used heavily in the transport and construction sectors.
The metal this week hit 13-year highs at $3,215 a tonne and is less than $200 from its all-time high achieved in 2008.
“Energy accounts for around 40 percent of the costs of manufacturing aluminium,” noted Commerzbank analyst Daniel Briesemann.
– Copper shines –
Tin, used in the making of smartphones, hit an all-time high at $37,500 a tonne on Friday.
A tonne of copper meanwhile rose back above the psychological $10,000 mark, having struck a record-high $10,747.50 a tonne in May.
There have been strong gains also for nickel and lead this week.
“The surge in metal prices might continue next week as the brewing global energy crisis has forced many producers to curtail output,” Oanda analyst Edward Moya told AFP.
Runaway prices are meanwhile fuelling “inflationary pressures in the metal space and that will become a major headwind for the global economic recovery”, he added.
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