The global trade war has another metal victim: zinc. It has dropped to a multi-month low and the sole reason is the increasing trade tension across the world. The war between the world’s top two economies, fear of strong glut, and increasing value of the dollar have resulted in the drop in the zinc prices. In addition, on the London Metal Exchange (LME), zinc is the worst performing non-ferrous metal. Indian prices are also registered new low. Thus, investors are in fear that the increasing global tension will catastrophically damage the global economic growth and as a result the global demand for the metal.
Strong Dollar And Trade War Bringing Down The Zinc Prices
U.S. and China are slapping tariffs on each other’s imports which has roiled the global economy and commodity market. This situation is likely to get worse unless China takes some changes in its subsidies plans for high-end industries and intellectual properties practices. China is a major producer and consumer of zinc. The slow economic growth in China, prevailing trade tensions have reduced the market value of the metal. Last year, China produced about 5 million Megatonne of zinc, and it consumed about half of the global consumption. In addition, Money Control reported that the zinc inventories in Shanghai and LME warehouses are also reducing, falling more than 45 percent since 2017.
The reducing zinc prices are also because of a strong dollar. The surge in dollar prices has made dollar-dominated metals more expensive for buyers. Since, the U.S. President, Donald Trump started the trade war by imposing tariffs on import, the U.S. greenback has risen more than 7 percent. Moreover, the recent decisions taken by the U.S. government are further boosting the dollar value, making zinc prices lesser than ever. Looking ahead, if the trade war continues between the two leading counties of the world, the impact on zinc prices will be dangerous, reducing its global demand.
The post Surging Dollar Prices, Trade Dispute Damaging Zinc Prices appeared first on OWLT Market.
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