LONDON--London Metal Exchange three-month zinc extended earlier weakness, falling 8% to its lowest level in over six months on fund liquidation and technical selling, traders said.
Fund liquidation is pressuring zinc after the metal had a very poor close Thursday, one London-based trader said.
Zinc prices traded at $3,090 a metric ton at 1515 GMT, down roughly 8% from Thursday.
Zinc followed copper lower Thursday after the release of data showed a contraction in the U.S. manufacturing sector. The January ISM manufacturing index fell to 49.3 from 51.4 in December.
Market participants were expecting volatility to continue due to key U.S. economic data. January non-farm payrolls came in at up 111,000, below expectations of a 155,000 rise, and the jobless rate rose to 4.6% from 4.5% in December, data released Friday showed.
However, the base metals look like they are trading on their own fundamentals at the moment, said the LME trader.
LME zinc stocks fell 175 tons to 98,350 tons Friday, according to LME data. Currently, LME inventories are down around 70% on the year, standing at roughly one week's worth of global zinc demand.
However, the rate of decline in LME stocks has eased since December, said analysts.
In addition, a surge in zinc exports from China over the past few months and an increased in production has made physical stocks more readily available and thus pressured prices, the LME trader said.
The falls have also spread to other metals driven by fund liquidation. At 1515 GMT, three-month copper fell roughly 4% to an intraday and 11-month low of $5,330/ton from Thursday while aluminum dropped around 2% to an intraday low of $2,669/ton.
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