Monday 22 February 2016 4:17 pm

Metal prices soar on fears of supply shortage: Zinc, iron ore, copper all climb higher

Fears over a supply shortage have pushed up the price of base metals, with zinc hitting four month highs.

On the London Metal Exchange (LME) the price of three-month zinc hit an intraday peak of $1,790 a tonne, up over two per cent, the highest price since late October. It closed at $1,781 a tonne, after gaining three per cent on Friday.

The jump in price has been put down to the closure of major zinc mines driving down supplies.

Alongside the zinc rally, iron ore has climbed by seven per cent to over $50 a tonne as investors hope for a revival in China's steel industry.

LME copper gained 1.6 per cent to finish at $4,694 a tonne after touching $4,701 earlier in the session, its highest since early February. Meanwhile LME aluminium closed up by 1.6 per cent at $1,574 a tonne.

Tin however lost 0.3 per cent on the LME to finish at $15,730 a tonne.

The gold price has however fallen throughout the day's trading, following big gains so far in 2016.

The price of metals have been falling for nearly a year as investors fret over a slowdown in emerging markets, however the Bloomberg Commodity Index has levelled off since the end of January after a 10 month slide.

The Chinese economy, the world's biggest consumer of base metals, has slowed in recent years from a peak of 15 per cent yearly growth, to around seven per cent.

However, demand for zinc has been healthy, with data out of China earlier showing refined imports of zinc, mainly used for galvanizing steel, increased by 150 per cent in January.

Mining companies have been heavily hit by the sell off in commodities, with Anglo American, Rio Tinto, and Glencore ditching their dividends earlier this month.

Investors are braced for Australian miner BHP Billiton to drastically cut its dividend when it reports its full year earnings at 10.30pm GMT this evening.