The price of the industrial metal zinc rose to its highest level since April 2019 on fears of a slowdown in Chinese metal production and expectations that US stimulus measures would boost market sentiment.
Production of refined zinc in China, the world's largest producer, fell to 562,300 tonnes last month, down 6,900 tonnes from October.
In addition, production is expected to fall further in December as falling processing fees squeeze margins.
The cost of processing zinc concentrate at Chinese smelters has fallen to its lowest level in more than two years.
While demand for industrial metals was badly damaged in the early days of the coronavirus outbreak, tight supply has helped push prices up 70 per cent from their Lows in March.
Last month, Vedanta Zinc International suspended operations at its Gamsberg mines in South Africa, heightening concerns about tighter supply.
Demand for zinc and lead has rebounded since June, driven by China's economic recovery, according to Trafigar, the world's second largest independent metals trader.
"The recovery is also good in Europe and we expect the recovery in all markets to continue into the fourth quarter," Amin Zahir, head of metals and minerals trading at Traficar, said in an earnings note.
"We remain optimistic about demand for both metals (lead and zinc), with continued support from the construction and automotive industries."
Yao Wenyu, senior commodity strategist at ING, said in a note that the recent shutdowns at the Gamsberg mine in South Africa and the tight zinc market in China had supported the zinc market.
Industrial metals zinc and copper have surged about 25 per cent this year, outperforming six main base metals on the London Metal Exchange, as China has led the global economic recovery from the coronavirus outbreak.
Global stocks hit new highs on Wednesday and all metals prices rose as investors pinned their hopes on the U.S. economic stimulus package.
Treasury bonds and the dollar fell for the first time this week.
Despite Opposition from Democrats to parts of the plan, Treasury Secretary Mnuchin unexpectedly restarted negotiations on the 2020 COVID-19 rescue, offering a $916bn rescue package, opening a possible new path to a deal by the end of the year.
Zinc rose 1.6 per cent to $2,844 a tonne at 2.12pm London time, its fifth straight day of gains.
Copper rose 0.6 per cent to $7,746 a tonne.
Aluminum rose 2.6 percent.
