The commodity trading company Trafigura extracts substantial zinc quantities from Singaporean London Metal Exchange warehouses before sending some of these shipments to the United States according to insiders.
The unknown quantities of zinc removal have driven benchmark zinc prices to rise 5% this month to $2,850 per metric ton thus reducing the difference between spot and futures prices.
The industry reports that the shipments could fulfill supply obligations for Nyrstar’s Clarksville Tennessee smelter because the facility needs to shut down for maintenance starting in mid-October for three weeks. The Clarksville plant of Nyrstar which operates as a Trafigura subsidiary produces 125,000 tons of zinc every year.
The metal storage agreements known as “rent deals” allow warehouse operators to share revenue with metal delivery companies even when they do not own the metal. The LME data indicates Singapore zinc stock levels decreased by more than 30% since late July with 33,000 tons reserved for delivery.
Two sources indicate that Trafigura might be taking strategic steps because of ongoing U.S. trade investigation into zinc imports. The U.S. Geological Survey has designated zinc as a critical mineral which makes these shipments more important from a strategic perspective.
