Goldman Sachs, JPMorgan, Glencore defeat US lawsuit alleging manipulation of zinc prices

Leading companies Goldman Sachs, JPMorgan Chase & Co and Glencore Plc defeated a US law suit that alleged them of rigging the price of zinc. A US judge dismissed the private antitrust lawsuit filed by a group of zinc purchasers, who accused them and affiliates of having conspired to jack up the metal's prices.

Zinc, used in coating steel against corrosion, finds extensive use in batteries, castings and alloys and is world's fourth most widely produced metal after iron, aluminum and copper. In the class-action lawsuit, the purchases accused that the defendants had been conspiring since May 2010 to create long queues for the metal at their warehouses licensed under the London Metal Exchange, reports Reuters.

However, District Judge Katherine Forrest in Manhattan said buyers have failed to prove that the defendants artificially inflated zinc prices and violated the federal antitrust law known as Sherman Act.

Alleging that the companies of attempting hoarding and moving of zinc from one warehouse to another, the buyers raised issues like falsification of shipping records and manipulation of LME rules. The purchasers also said the intent of these companies was to cause artificial supply shortages as a front to inflate prices.

Charges not proved

“But, at long last, plaintiffs have not adequately alleged that such price movement was due to a plausible antitrust violation, as opposed to parallel, unilateral conduct beyond the reach of that statutory scheme,” Forrest wrote.

The judge said some other factors independent of the alleged conspiracy could have influenced the prices. The judge also directed the plaintiffs to re-plead against Glencore or its affiliate Pacorini Metals USA unit.

“Plaintiffs cannot adequately plead their broad, five-year conspiracy simply by noting developments in the zinc market, particularly when many of those developments occurred at vastly different times over the class period such that the possibility of causation is hard to assess,” she said.

The spokesman of Goldman, Michael DuVally, Brian Marchiony of JP Morgan and Glencore spokesman Charles Watenphul declined to comment.

Price recovery

Meanwhile, concerns are up over the falling prices of zinc. Investingnews.com said despite zinc’s pricing struggles in 2015, the metal’s fundamentals are strong, reports The Reminder.

Pasinex Resources head, Steve Williams said he is “very bullish” on zinc that the price “must go up.” But he does not know “when this will occur except to say that the longer time runs on, the more probable this is to occur.”