March 27, 2019 / 8:03 AM / 3 months ago

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

(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 ended up almost 1 percent at 22,210 yuan. Three-month zinc in London slipped 0.5 percent to $2,858 by 0737 GMT.

* OPEN INTEREST: Market open interest in Shanghai zinc jumped to 632,310 lots on 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 1.4 percent in Shanghai to 100,930 yuan a tonne, while Shanghai copper nudged up 0.3 percent to 48,390 yuan a tonne. In London, copper rose 0.1 percent to $6,338 while aluminium added 0.5 percent to $1,899.

* 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.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS

($1 = 6.7126 Chinese yuan)

Reporting by Tom Daly, additional reporting by Enrico Dela Cruz in MANILA; Editing by Rashmi Aich

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