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CORRECTED-METALS-Zinc jumps to 8-month high on fears of supply crunch

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(Corrects zinc milestone to 8-month peak, not 7-month high) By Peter Hobson LONDON, March 12 (Reuters) - Zinc prices jumped to an eight-month peak on Tuesday, driven higher by a supply shortfall, dwindling stockpiles on the London Metal Exchange (LME) and expectations of solid demand from top consumer China.

Benchmark zinc on the LME ended up 3.7 percent at $2,838 a tonne after touching $2,840, the highest since July 3.

The metal, used to galvanise steel, is up about 15 percent this year.

Mines have begun to produce more zinc concentrate but not enough metal is being refined to satisfy demand, pushing stocks in LME warehouses to their lowest in more than a decade and driving up the premium for nearby metal.

"The refined market is still very, very tight," said ICBC Standard analyst Marcus Garvey. "We're probably not going back to a refined surplus until next year." He also said recent increases in lending and local government bond issuance in China suggests demand for metals will remain solid through this year.

STOCKS: Headline LME zinc stocks have fallen to 59,200 tonnes, the lowest since October 2007 . Between 50 and 79 percent of warrants are held by a single entity and about a quarter of the metal is already earmarked for delivery. SPREAD: Suggesting a shortage of immediately available metal on the LME, the premium for cash zinc over the three-month contract has surged to $49.50, the highest in two months. DEFICIT: The International Lead and Zinc Study Group (ILZSG) said on Monday the global zinc market deficit narrowed to 28,000 tonnes in January from a revised deficit of 62,400 tonnes in December. The ILZSG showed a deficit of 384,000 tonnes last year and shortfalls of 442,000 tonnes and 128,000 tonnes respectively in 2017 and 2016. Analysts expect a fourth deficit this year.

POSITIONING: Speculative investors trimmed their net long position in LME zinc to 5 percent of open contracts at the end of last week from 9.3 percent in early February, according to brokers Marex Spectron.

COPPER: LME copper finished up 1 percent at $6,472 a tonne, nearing a 7-month high of $6,540 touched on Feb. 25. TIGHT MARKET: Headline LME copper stocks at 112,725 tonnes are the lowest since May 2008, and between 50 and 79 percent of warrants are held by one entity , keeping the premium for cash metal over the three-month contract unusually high at $26 a tonne.

DOLLAR: The dollar weakened for a third day, helping boost metals by making them cheaper for buyers holding other currencies. OTHER METALS: Aluminium closed up 1.4 percent at $1,873 a tonne, nickel rose 1.6 percent to $13,100, lead added 0.5 percent to $2,085 and tin ended 1.3 percent higher at $21,325.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Tom Daly; Editing by Jan Harvey and David Evans)

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