LONDON, July 10 (Reuters): Zinc prices fell to their lowest in more than a year on Tuesday as expectations of rising supplies and a narrowing deficit sparked a sell-off that accelerated after prices fell below key technical support levels.
Benchmark zinc on the London Metal Exchange was down 2.5 per cent at $2,636 a tonne at 1049 GMT. Prices of the metal used to galvanise steel earlier fell to $2,624.50, the lowest since June 21 last year.
Shortages saw zinc prices rise 60 and 29 per cent in 2016 and 2017 respectively. Losses so far this year total 20 per cent.
"The concentrate market will become better supplied as this year progresses and new mine and reactivated supply comes on stream," said CRU analyst Helen O'Cleary.
"Section 232 tariffs on steel products (including galvanised steel) and escalating trade tensions have given rise to risk aversion."
US President Donald Trump has rattled the world trade order this year by seeking to renegotiate the terms of some of the United States' trading relationships, in particular with China. He has imposed tariffs on some imports including steel, raising fears of a global trade war.
Earlier this year, the International Lead and Zinc Study Group (ILZSG) said some 880,000 tonnes of additional zinc mine capacity was due to come on stream this year.
The global market balance in zinc will be much less tight this year due to mine openings and expansions, Joao Jorge, director of market research and statistics at ILZSG said.
Traders said many funds with bets on higher zinc prices were cutting their positions, which had helped fuel downward momentum and a break of key technical levels such as the 100-week moving average at around $2,890.
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