* Premium for cash zinc versus benchmark near 21 yr high
* Wider markets rattles by rising Sin-U.S. trade tensions (Update prices)
By Maytaal Angel
LONDON, Nov 22 (Reuters) - Zinc held onto gains on Thursday on persistent supply tightness while bellwether copper dipped on worries over a looming global growth slowdown and escalating trade tensions between Washington and Beijing.
The premium for the zinc cash contract over the three-month contract MZN0-3 hit a 21-year high of $97 a tonne on Tuesday due to falling stocks in London Metal Exchange (LME) warehouses. It was trading at $94.50 on Thursday.
At 123,500 tonnes, LME stocks have roughly halved since mid-August. MZNSTX-TOTAL
“There’s clearly not a lot of metal in the system so the price is responding to those signals of extreme tightness,” said Vivienne Lloyd, analyst at Macquarie.
“We’re friendly towards zinc, have been for a while. It’s got an underlying bearish case but on a two, three, four month basis it’s quite a tight metal market. I wouldn’t say that’s entirely priced in at this stage.”
Capping upside in zinc and weighing on copper, global equities fell as investor worries mounted about slowing global growth in the face of rising U.S. interest rates and trade tensions.
China, the world’s top metals user, rejected fresh U.S. accusations of perpetuating “unfair” trade practices and urged Washington to stop making provocations, showing little sign of backing down days ahead of a high-stakes meeting between leaders from both countries.
PRICES: Zinc traded flat in official midday rings at $2,569 a tonne, holding onto Wednesday’s gains and clocking up an increase of around 3.5 percent so far this month, while copper traded down 0.2 percent in rings at $6,224 a tonne, notching up gains of around 4 percent this month.
TECHNICALS: Zinc faces major resistance at the November high of $2,647, while copper faces major resistance at its November high of $6,315, broker Marex Spectron said in a note.
POSITIONS: Traders are keeping a close eye on positions holding large amounts of LME copper warrants and cash contracts, which are fuelling nervousness about nearby availability.
ALUMINIUM SUPPLY: Xinfa Group, one of China’s top aluminium smelters, will not have to cut metal production in its home city of Liaocheng this winter and will only have to reduce alumina output by 10 percent for two months.
STEEL: China’s steel sector is toying with falling into a bear market, with prices almost down 20 percent in the past three months as the industry’s run of record production meets the reality of a slowing economy and trade disputes.
PRICES: Aluminium traded flat in rings at $1,953 a tonne, lead was last bid down 0.4 percent in rings at $1,998 a tonne, tin was last bid up 0.8 percent in rings at $19,400, while nickel was last bid up 0.1 percent at $11,030.
Additional reporting by Mai Nguyen; Editing by Alexandra Hudson and Mark Potter