(Updates with closing prices)
By Zandi Shabalala
LONDON, March 13 (Reuters) - Zinc prices held close to an eight-month high on Wednesday as sinking stocks of the metal on the London Metal Exchange (LME) market fuelled supply concerns even as inventories grew elsewhere.
Inventories of zinc in warehouses certified by the LME touched 58,950 tonnes, their lowest since October 2007. MZNSTX-TOTAL
This boosted the premium for cash zinc over the three-month LME contract to $52 per tonne on Tuesday, its highest since Jan. 8. CMZN0-3
“Tightness on the LME seems to be playing into higher prices, even though there is a reasonable amount of stock in China which suggests that the global market is not as tight as the LME is,” said Capital Economics analyst Ross Strachan.
Benchmark zinc closed up 0.4 percent at $2,848 a tonne after earlier reaching its highest since July at $2,848.50.
The metal is the second best performing base metal this year, up 15 percent after shedding 26 percent in 2018.
CHINA STOCKS: Zinc stocks in warehouses monitored by ShFE are above 117,000 tonnes, according to latest data. That, combined with more than 82,000 tonnes in Shanghai bonded warehouses, takes the total to near 200,000 tonnes. ZN-STX-SGH
The pace of stock gains on ShFE has been quicker than most would have expected, according to analysts at GFMS Refinitiv.
POSITIONS: LME broker Marex Spectron estimates speculators held a collective net long position of 5 percent of open interest last Friday from 9.3 percent in early February.
BALANCE: The global zinc market deficit narrowed to 28,000 tonnes in January from a revised deficit of 62,400 tonnes in December, data from the International Lead and Zinc Study Group (ILZSG) showed.
DOMINANT POSITION: Zinc prices have also been bolstered by the large position held by one party, which controls 50-79 percent of available LME zinc inventories, according to LME data. <0#LME-WHL>
SUPPLY: Floods in Australia’s Queensland state last month have disrupted rail delivery of zinc exports to the northern port of Townsville, affecting miners, including Glencore , MMG Ltd and South 32.
ALUMINIUM: Aluminium ended up 1.8 percent at $1,906 a tonne after Norway’s Norsk Hydro said production at its Neuss plant in Germany would likely fall by 10,000-20,000 tonnes due to an accident.
TRADE: The United States and China may be in the final weeks of discussions to hammer out a deal to ease their tit-for-tat tariffs dispute, U.S. Trade Representative Robert Lighthizer said on Tuesday.
OTHER METALS: Copper did not trade at the close but was bid unchanged at $6,472 a tonne. Lead gained 2.1 percent to $2,129.50, nickel rose 0.8 percent to $13,210 and tin was bid down 0.8 percent at $21,150.
Additional reporting by Tom Daly in Beijing and Eric Onstad and Peter Hobson in London; Editing by Kirsten Donovan and David Evans