March 15, 2019 / 8:00 AM / 6 months ago

METALS-Zinc sheds gains, spreads surge after China flags April tax cut

 (Adds detail, Shanghai closing prices, and updates London
    MANILA/BEIJING, March 15 (Reuters) - Zinc prices fluctuated
wildly on Friday and Shanghai Futures Exchange (ShFE) spreads
ballooned after Chinese Premier Li Keqiang said a planned cut in
value-added tax (VAT) would take effect from April 1.
    London zinc spiked 2 percent to $2,882 a tonne, the highest
since July 2, immediately after Li's comments before
profit-taking saw the metal used to galvanise steel slip into
the red.
    It is still on course for a 3 percent gain this week, which
would be its best week in six, as investors worry about tight
    The low-inventory situation, as well as fears of production
outrages, has spurred the backwardation in London Metal Exchange
zinc higher, Jinrui Futures said in a note.
    The premium for cash zinc over the three-month LME contract
CMZN0-3 stood at $55 a tonne on Thursday, the highest since
early January.     
    Some speculators on the ShFE had previously bet that the
planned cut in VAT on China's manufacturing sector, which
includes non-ferrous metals, to 13 percent from 16 percent would
be implemented on May 1, increasing the backwardation on metals
including copper and aluminium. 
    * LME ZINC: Three-month LME zinc was trading down
0.9 percent at $2,800 a tonne, as of 0743 GMT. The most traded
May ShFE zinc contract rose as much as 1.4 percent to
22,170 yuan ($3,299.55) a tonne, the highest since April 2,
before closing down 1 percent.
    * ZINC: Vedanta Zinc International, a unit of diversified
miner Vedanta Resources, said on Thursday it would
close its zinc refinery in Namibia for five weeks after a strike
by its mining contractor depleted stocks.
    * COPPER: Benchmark LME copper added 0.5 percent to
$6,435.50 a tonne, while ShFE copper inched up 0.1
percent to 49,320 yuan a tonne.
    * SPREADS: The backwardation between the March and
April ShFE copper contracts spiked to over 1,000 yuan a
tonne, the highest since May 2014, after Li's comments. The
spread between April and May, previously in a steep
backwardation, immediately flipped into a deep contango. 
    * VOLUMES: Trading volumes on the May ShFE copper contract
were 326,806 lots, almost double the 30-day average. 
    * For the top stories in metals and other news, click       
    * Asian stocks advanced as sentiment improved on a report
that U.S.-China trade talks were making progress and after UK
lawmakers voted to delay a potentially chaotic exit from the
European Union.    
 BASE METALS PRICES                       0745 GMT
 Three month LME copper                       6433
 Most active ShFE copper                     49310
 Three month LME aluminium                    1909
 Most active ShFE aluminium                  13660
 Three month LME zinc                         2799
 Most active ShFE zinc                       21650
 Three month LME lead                         2104
 Most active ShFE lead                       17200
 Three month LME nickel                      12990
 Most active ShFE nickel                    100530
 Three month LME tin                         21275
 Most active ShFE tin                       147260
 BASE METALS ARBITRAGE                            
 LME/SHFE COPPER              LMESHFCUc3    -743.9
 LME/SHFE ALUMINIUM           LMESHFALc3  -1076.47
 LME/SHFE ZINC                LMESHFZNc3   -593.73
 LME/SHFE LEAD                LMESHFPBc3     332.4
 LME/SHFE NICKEL              LMESHFNIc3    1379.8
 ($1 = 6.7191 Chinese yuan)

 (Reporting by Enrico dela Cruz in MANILA and Tom Daly in
BEIJING; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)
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