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METALS-Zinc rallies in afterglow of steel advance

Kitco News

(Adds analyst comment, updates prices)

BEIJING/MELBOURNE, Nov 22 (Reuters) - Zinc rallied more than 1 percent in London on Wednesday, tracking strength in Chinese steel prices on expectations that mills will restock following the country's forced production cuts over winter.

Zinc continues to be supported by its own fundamentals, as supply from top producer and consumer China has been impacted by environmental inspections.

"In zinc, reduced Chinese mine production will keep balances tight, supporting prices over the next six months," J.P. Morgan said in a note.

FUNDAMENTALS

* LME ZINC: London Metal Exchange (LME) zinc was up 1.3 percent at $3,231.50 per tonne, at 0401 GMT. Earlier in the session, it touched $3,236 a tonne, highest since Nov. 11. Prices have also broken through shorter-dated moving averages, sending a buy signal to trend following funds.

* SHFE ZINC: Shanghai Futures Exchange zinc rallied 2.6 percent, while Shanghai rebar climbed 1.7 percent. Sentiment on zinc was also bullish at the China Lead and Zinc Week gathering in Shenzhen, participants said.

* ZINC FUNDAMENTALS: The global zinc market deficit widened to 39,800 tonnes in September from a revised deficit of 38,700 tonnes in August, data from the International Lead and Zinc Study Group (ILZSG) showed. * COPPER: LME copper edged up by 0.1 percent to $6,914.50 a tonne, extending gains from the previous session, when it was up 1.2 percent. Shanghai copper rallied 1.5 percent to 54,080 yuan ($8,164.87)a tonne.

* FEDERAL RESERVE: The Federal Reserve is "reasonably close" to its goals and should gradually keep raising U.S. interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, and of driving unemployment down too far, Fed Chair Janet Yellen said on Tuesday.

* NICKEL: Nickel , also used by the steel sector, retreated as much as 1.3 percent, after posting gains of nearly 2 percent on Tuesday.

* CHINA PROPERTY: China will step up financial regulation and crack down on speculation in the property market to stabilise prices and fend off bubble risks, state television CCTV reported on Tuesday, signalling renewed efforts to rein in risks from a rapid build-up in debt in the economy. * For the top stories in metals and other news, click or MARKETS NEWS

* Asian shares joined a global rally and scaled a fresh decade peak on Wednesday as strong world growth and rising corporate profits lured hordes of investors into equities, while oil prices jumped on expectations of a production cut. DATA AHEAD (GMT)

1330 U.S. Durable goods Oct

1330 U.S. Weekly jobless claims

1500 Euro zone Consumer confidence flash Nov

1900 U.S. Federal Reserve releases minutes from

Oct.31-Nov.1 policy meeting

PRICES

BASE METALS PRICES 0406 GMT Three month LME copper 6914.5 Most active ShFE copper 54080 Three month LME aluminium 2089.5 Most active ShFE 14930 aluminium Three month LME zinc 3231.5 Most active ShFE zinc 25740 Three month LME lead 2481.5 Most active ShFE lead 18930 Three month LME nickel 11715 Most active ShFE nickel 94680 Three month LME tin 19400 Most active ShFE tin 142590

BASE METALS ARBITRAGE LME/SHFE COPPER LMESHFCUc3 585.07 LME/SHFE ALUMINIUM LMESHFALc3 -1168.18 LME/SHFE ZINC LMESHFZNc3 419.59 LME/SHFE LEAD LMESHFPBc3 -909.23 LME/SHFE NICKEL LMESHFNIc3 2698.07

($1 = 6.6235 Chinese yuan)


<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Melanie Burton and Tom Daly in BEIJING; Editing by Gopakumar Warrier and Sherry Jacob-Phillips)

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