Off The Wire
METALS-Tight supplies propel zinc prices to highest since 2007
* LME/ShFE arb: * Zinc cancelled warrants at 55 pct of total LME stocks
* Premium for cash zinc over 3-mth around $50 a tonne
(Adds closing prices)
By Pratima Desai
LONDON, Oct 4 (Reuters) - Zinc prices hit their highest in more than 10 years on Wednesday as tight supplies created by mine closures and healthy demand from top consumer China boosted the market.
Benchmark zinc on the London Metal Exchange ended up 1.2 percent higher at $3,302 a tonne. Earlier the metal, used to rust-proof steel, touched $3,308.75, its highest since August 2007.
"There is tightness ... mine closures from a few years ago are feeding through. But mine supply has picked up this year, which suggests tightness will start to fade as we move into next year," Capital Economics analyst Caroline Bain said.
"The demand outlook looks subdued, particularly if Chinese authorities close steel capacity ... This would mean zinc demand slows in the fourth quarter and early next year.
ENVIRONMENT: China has pledged to cut average concentrations of airborne particles known as PM2.5 by more than 15 percent year-on-year in the winter months in 28 northern cities to meet key smog targets. This means curbing activity in polluting industries such as steel production and zinc smelting.
CHINA IMPORTS: China's zinc imports at 65,609 tonnes in August are up nearly 160 percent over the same month last year. But the year-to-date total at 314,086 tonnes is down nearly six percent. CHINA STEEL: An official gauge of China's steel industry declined in September. STEEL USAGE: About half of global zinc consumption -- estimated at around 15 million tonnes this year -- is used to galvanise steel.
LME STOCKS: Stocks of zinc in LME approved warehouses at 251,750 tonnes are down more than 40 percent since the start of 2017. Cancelled warrants -- metal earmarked for delivery -- at 55 percent of total stocks have also reinforced worries about shortages. HOLDINGS: Large holdings of zinc warrants and cash contracts have also fuelled concern about nearby supplies on the LME market. The premium for the cash over the three-month contract is holding around $50 a tonne. LEAD: Benchmark lead slipped 1.2 percent to $2,560 a tonne. Earlier the metal, used to make batteries, rose to $2,620.50, its highest since August 2011. The environmental crackdown in China has also reduced supplies of lead, which is mined alongside zinc.
PHILIPPINES: The nickel market is waiting to see what the new Philippine environment secretary, Roy Cimatu, has in store for the country's mining industry. His predecessor had ordered 26 of 41 mines in the world's top nickel ore supplier be shut or suspended to protect water resources. PRICES: Copper ended little changed at $6,521, aluminium traded up 1.7 percent at $2,167, tin was bid down 0.1 percent to $20,775 and nickel fell 0.05 percent to $10,615.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Top base and precious metals analysis - GFMS LME/ShFE arb: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Addtional reporting by Eric Onstad; Editing by Jane Merriman and Alexander Smith)