March 27, 2019 / 5:00 AM / a month ago

METALS-Shanghai zinc hits 1-year high; tight stocks, trade talks in focus

 (Adds comment, updates prices)
    BEIJING, March 27 (Reuters) - Most base metals gained ground
on Wednesday, with Shanghai zinc touching a more than one-year
high, as investors focused on tight inventories and the
resumption of U.S.-China trade talks.
    The U.S. Trade Representative Robert Lighthizer and Treasury
Secretary Steven Mnuchin are expected to arrive in Beijing later
on Wednesday for talks aimed at resolving a long-running trade
row that has weighed on metals prices.
    With London Metal Exchange zinc stocks MZN-STOCKS falling
to their lowest 28 years, the metal used to galvanise steel
jumped 1.5 percent in London on Tuesday and prices in top zinc
user China are also buoyant.  
    Current zinc ingot inventories are "extremely low" and the
next two-three months will see "intense destocking" as
consumption in China recovers, Jinrui Futures said in a note.
         
    FUNDAMENTALS
    * SHANGHAI ZINC: The most traded May zinc contract on the
Shanghai Futures Exchange rose as much as 2.1 percent
to 22,450 yuan ($3,344.46) a tonne, its highest since March 7,
2018, and stood at 22,240 yuan a tonne at the end of the
morning. Three-month zinc in London slipped 0.5 percent
to $2,860 by 0450 GMT.
    * OPEN INTEREST: Market open interest in Shanghai zinc
jumped to 632,310 lots of Tuesday, the highest since July 2017,
pointing to greater bullishness.
    * ZINC SPREADS: The premium of cash LME zinc over the
three-month contract CMZN0-3 stood at $47 a tonne on Tuesday,
up $10.50 from Monday, indicating tighter near-term supply.
    * STOCKS: At 56,425 tonnes, LME zinc stocks are at their
lowest since 1991, while copper inventories MCUSTC-TOTAL have
fallen for seven straight days to 172,275 tonnes after spiking
in the middle of the month. 
    * OTHER METALS: Nickel, used to make stainless steel, added
1.5 percent in Shanghai to 101,040 yuan a tonne, while
Shanghai copper nudged up 0.3 percent to 48,400 yuan a
tonne. In London, copper also rose 0.3 percent to $6,349
while aluminium added 0.6 percent to $1,899.50.
    * COPPER: Polish miner KGHM and a union
representing workers at its Sierra Gorda copper mine in Chile
have agreed to extend contract talks, temporarily warding off
the threat of a strike.   
    * ALUNORTE: Norsk Hydro has agreed with Brazil's
federal prosecutor to have a third-party technical assessment
that, if positive, could lead to it resuming full production at
the half-shut Alunorte alumina refinery.
            
    MARKETS NEWS    
    * Asian shares slipped as investors tried to come to terms
with a sharp shift in U.S. bond markets and the implications for
the world's top economy.    
        
    DATA/EVENT AHEAD (GMT)
    0745   France   Consumer Confidence    March
    0745   France   Producer Prices MM     Feb
    1230   US       International Trade    Jan
    1230   Canada   Trade Balance          Jan
    1500   US       Current Account        Q4
    1600   US       Federal Reserve issues annual benchmark 
    revisions to its U.S industrial production and capacity use
    data from 1972 through March 2019
        
    PRICES        
 BASE METALS PRICES                       0451 GMT
 Three month LME copper                       6349
 Most active ShFE copper                     48390
 Three month LME aluminium                    1901
 Most active ShFE aluminium                  13615
 Three month LME zinc                         2860
 Most active ShFE zinc                       22235
 Three month LME lead                         2003
 Most active ShFE lead                       16840
 Three month LME nickel                      13080
 Most active ShFE nickel                    101030
 Three month LME tin                         21390
 Most active ShFE tin                       146770
                                                  
 BASE METALS ARBITRAGE                            
 LME/SHFE COPPER             LMESHFCUc3     -997.5
 LME/SHFE ALUMINIUM          LMESHFALc3   -1128.39
                                         
 LME/SHFE ZINC               LMESHFZNc3    -619.37
 LME/SHFE LEAD               LMESHFPBc3     764.53
 LME/SHFE NICKEL             LMESHFNIc3   -3104.87
                                         
 
($1 = 6.7126 Chinese yuan renminbi)

    
 (Reporting by Tom Daly; Editing by Rashmi Aich)
  
 
 
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